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FREDERICK  A.  CLEVELAND.  PH.D. 


Publications  of 
The  Institute  for  Government  Research 


STUDIES  IN  ADMINISTRATION 

The    System    of    Financial    Administration    of    Great 
Britain 

By    W.    F.    Willoughby,    W.    W.    Willoughby    and 
S.  M.  Lindsay 

The  Budget 

By  Rene  Stourm 

(T.  Plazinski,  Translator;  W.  F.  McCaleb,  Editor) 

The  Canadian  Budgetary  System 

By  Harold  G.  Villard  and  W.  W.  Willoughby 

The  Problem  of  a  National  Budget 

By  W.  F.  Willoughby  (In  press) 

The  Movement  for  Budgetary  Reform  in  the  States 
By  W.  F.  Willoughby  (In  press) 

The  System  of  Financial  Administration  of  the  United 
States  (In  preparation) 

Teachers'  Pension  Systems  in  the  United  States 

By  Paul  Studensky  (In  preparation) 


PRINCIPLES   OF  ADMINISTRATION 

Principles    Governing   the    Retirement    of    Public    Em- 
ployees 

By  Lewis  Meriam 

Principles  of  Government  Purchasing 
By  Arthur  G.  Thomas  (In  press) 

Principles  of  Public  Employment 

By  A.  W.  Procter  (In  preparation) 


SERVICE  MONOGRAMS  OF  THE  UNITED  STATES 
GOVERNMENT 

The  U.  S.  Geological  Survey  (In  press) 

The  Reclamation  Service  (In  press) 

The  Bureau  of  Mines  (In  preparation) 

D.  APPLETON  &  COMPANY  . 

PUBLISHERS  NEW   YORK 


THE  INSTITUTE  FOR  GOVERNMENT  RESEARCH 
STUDIES  IN  ADMINISTRATION 


THE  CANADIAN 
BUDGETARY  SYSTEM 


BY 

HAROLD  G.  VILLARD 

AND 

W.  W.  WILLOUGHBY 


D.  APPLETON  AND  COMPANY 
NEW  YORK  LONDON 


osS 


Copyright,  1918 
The  Institute  for  Government  Research 


Printed  in  the  United  States  of  America 


The  Institute  for  Government  Research 

Washington,  D.  C 


The  Institute  for  Government  Research  is  an  association  of 
citizens  for  cooperating  with  public  officials  in  the  scientific 
study  of  government  with  a  view  to  promoting  efficiency  and 
economy  in  its  operations  and  advancirig  the  science  of  admin- 
istration. It  aims  to  bring  into  existence  such  information  and 
materials  as  will  aid  in  the  formation  of  public  opinion  and 
will  assist  officials,  particularly  those  of  the  national  govern- 
ment, in  their  efforts  to  put  the  public  administration  upon  a 
more  efficient  basis. 

To  this  end,  it  seeks  by  the  thoroughgoing  study  and  ex- 
amination of  the  best  administrative  practice,  public  and 
private,  American  and  foreign,  to  formulate  those  principles 
which  lie  at  the  basis  of  all  sound  administration,  and  to  de- 
termine their  proper  adaptation  to  the  specific  needs  of  our 
public  administration. 

The  accomplishment  of  specific  reforms  the  Institute  recog- 
nizes to  be  the  task  of  those  who  are  charged  with  the  re- 
sponsibility of  legislation  and  administration ;  but  it  seeks  to 
assist,  by  scientific  study  and  research,  in  laying  a  solid 
foundation  of  information  and  experience  upon  which  such 
reforms  may  be  successfully  built. 

While  some  of  the  Institute's  studies  find  application  only 
in  the  form  of  practical  cooperation  with  the  administrative 
officers  directly  concerned,  many  are  of  interest  to  other 
administrators  and  of  general  educational  value.  The  results 
of  such  studies,  the  Institute  purposes  to  publish  in  such  form 
as  will  insure  for  them  the  widest  possible  utilization. 

OFFICERS 

Frank  J.  Goodnow,  Robert  S.  Brookings, 

Chairman.  V  ice-Chairman. 

Charles  P.  Neill,  Frederick  Strauss, 

Secretary.  Treasurer. 

TRUSTEES 

Edwin  A.  Alderman  A.  Lawrence  Lowell 

Robert  S.  Brookings  Samuel  Mather 

James  F.  Curtis  Charles  P.  Neill 

R.  Fulton  Cutting  Charles  D.  Norton 

Raymond  B.  Fosdick  Martin  A.  Ryerson 

Felix  Frankfurter  Frederick  Strauss 

Frank  J.  Goodnow  Theodore  N.  Vail 

Jerome  D.  Greene  Charles  R.  Van  Hise 

Arthur  T.  Hadley  Robert  S.  Woodward 
Caesar  Lombardi 

DIRECTOR 
W.  F.  Willoughby 


384959 


EDITORIAL  PREFACE 

In  the  first  published  report  of  the  Institute  for  Gov- 
ernment Research,  entitled  "The  System  of  Financial 
Administration  of  Great  Britain,'*  a  detailed  discussion 
was  given  of  a  system  of  financial  administration  which, 
if  account  be  taken  not  only  of  actual  efficiency  but  of 
conformity  to  the  requirements  of  popular  government, 
may  be  deemed  the  most  successful  in  existence. 

A  comparison  of  the  essential  features  of  that  system 
with  the  methods  of  financial  administration  pursued  in 
the  United  States  tends  strongly  to  show  that  the  British 
system  is,  in  almost  all  important  respects,  a  far  better 
one  than  that  which  we  possess.  Before,  however,  one 
is  warranted  in  urging  that  the  British  system,  or  certain 
features  of  it,  be  copied  by  ourselves,  it  is  necessary  to 
determine  whether  the  characteristic  features  of  that 
system  are  in  conformity  with  the  constitutional  struc- 
ture of  our  own  government  and  with  those  principles 
of  public  policy  which  we  have  accepted  as  fundamental. 
And  even  where  no  such  opposition  or  disharmony  is 
found,  it  is  further  necessary  to  determine  in  how  far 
the  efficient  or  inefficient  operation  of  the  system  is  due 
to  its  formal  organization  and  in  how  far  to  special  cir- 
cumstances and,  especially,  to  traditions  or  conventions 
which,  though  without  legal  force  or  definite  formula- 
tion, are  none  the  less  effective.  If,  therefore,  it  be  pos- 
sible to  trace  the  practical  working  of  the  system  under 
diverse  conditions  of  time,  place,  and  political  traditions, 
and  to  make  comparison  of  the  different  results  reached, 
an  opportunity  will  be  given  for  determining,  more  con- 
fidently than  would  otherwise  be  the  case,  the  extent  to 
which  the  good  and  bad  results  reached  have  been  due 
to  excellencies  and  defects  which  are  inherent  in  the  sys- 

VII 


INTRODUCTORY  NOTE 

tern  itself,  and  which,  therefore,  may  with  profit  be 
copied  or  avoided. 

Fortunately,  this  opportunity  may  be  found  in  the 
study  of  the  financial  system  of  the  great  oversea  Dom- 
inion of  Canada,  which  embodies  many  of  the  chief 
features  of  the  British  system.  To  this  study  the  present 
volume  is  devoted. 

In  order  that  the  comparison  of  actual  operation  in  the 
two  countries  might  be  most  effectively  made,  this  Can- 
adian report  has  been  made  to  follow  as  nearly  as  pos- 
sible the  order  and  mode  of  treatment  that  was  adopted 
in  the  report  on  the  British  system.  It  is  to  be  observed, 
however,  that  in  the  present  report  the  opinions  of  Can- 
adian public  officials  and  publicists  have  been  quoted  more 
liberally  than  were  the  observations  of  British  officials 
with  reference  to  the  workings  of  their  own  institutions. 
It  is  believed  that  the  poHcy  of  reproducing  these 
judgments  and  explanations  is  justified  even  though  their 
correctness  may  not  in  some  cases  be  admitted.  In 
order  also  that  the  method  of  presentation  followed  in 
the  British  system  might  be  understood,  it  was  deemed 
advisable  to  summarize  the  general  analysis  of  the  prob- 
lem of  financial  administration  given  in  the  first  chapter 
of  the  British  report.  It  has  been  necessary  to  speal< 
also  of  the  constitutional  system  of  Canada  in  so  far  as 
it  has  a  bearing  upon  the  administration  of  the  national 
finances. 

In  the  course  of  this  study  a  considerable  amount  of 
data  relative  to  the  budget  systems  of  the  several  provin- 
cial governments  of  Canada  was  gathered.  This 
material  has  been  presented  by  Mr.  Villard  in  the 
October,  19 17,  number  of  Municipal  Research,  a  period- 
ical published  by  the  New  York  Bureau  of  Municipai 
Research. 

As  two  authors  have  collaborated  in  the  preparation 
of  this  volume,  it  may  be  proper  to  state  that  chapters 
I,  2,  8,  9  and  11  have  been  written  by  Professor  Wil- 
loughby;  chapters  3  and  12  are  the  work  of  Mr.  Villard. 

VIII 


INTRODUCTORY  NOTE 

The  remaining  chapters  have  been  prepared  by  the 
authors  jointly.  Mr.  Villard  is  responsible  for  the  many 
quotations  from  Canadian  parliamentary  debates  and 
budget  speeches  found  in  the  text,  the  selection  and 
arrangement  of  which  only  an  exhaustive  perusal  of  the 
Canadian  Hansard  made  possible. 

W.  F.  WiLLOUGHBY. 


IX 


CONTENTS 

Chapter  Pack 

I.   Analysis  of  the  Problem  of  Financial  Administration  1 

II.   The  Canadian  Constitutional  System  8 

Relations  between  the  Dominion  and  the  Provinces 8 

The  Judiciary  10 

Distribution  of  Legislative  Powers  in  the  Dominion 11 

Totality  of  Legislative  Power  Granted 14 

Cabinet  Government  in  Canada 15 

Imperial  Control 16 

Outline  of  Dominion  Government 17 

III.  Control  of  Government  Expenditures  before  Confedera- 

tion: Provincial  Subsidies  20 
History  of  French  Canada,  1763-1812:  Executive  Absolu- 
tism over  Public  Receipts  and  Expenditures 20 

Legislature's  Restricted  Taxing  Powers 22 

Conflict  between  Executive  and  Legislature  over  Control  of 

Taxation  and  Appropriations :  1812-1830 23 

Introduction  of  Responsible  Government :  1831-1841 27 

Lord  Durham's  Report 28 

Initiative  in  Voting  Public  Money  Confined  to  Executive. .  32 
Parliament  Attains  Complete  Control  of  Government  Re- 
ceipts and  Expenditures :  1841-1867 33 

Events  Leading  to  Confederation 34 

Federal  Assumption  of  Provincial  Debts 36 

Subsidies  to  the  Provinces 37 

Subsidies  to  the  Newer  Provinces 39 

Changes  in  Debt  Assumption  Provisions 40 

IV.  Genebl\l  Administrative  Practices  46 

Canada's  Fiscal  Year  and  Sessions  of  Parliament 46 

Consolidated  Revenue  Fund 49 

Basis  upon  which  the  Public  Accounts  are  Rendered 51 

Closing  of  the  Accounts  of  the  Fiscal  Year:  Rule  as  to 

Lapsing  of  Unexpended  Balances 51 

Revotes  of  Lapsed  Estimates 55 

Capital  and  Revenue  Accounts 57 

V.   Executive  Expenditures  without  Legislative  Sanction  63 

Governor  General's  Warrants 63 

Abuse  of  Governor  General's  Warrants  not  Considerable 

since  1896  70 

Excess  Expenditures 71 

Fixed  and  Controllable  Expenditures 73 

XI 


CONTENTS 

Chapter  Page 

VI.   The  Estimates:  Preparation  and  Submission  75 

Preparation  of  the  Estimates 75 

Control  by  the  Minister  of  Finance 77 

Estimates  for  Public  Works 79 

Cabinet  Control 81 

Submission 83 

Distinction  between  General  and  Supplementary  Estimates.  83 

Form  of  the  Estimates 86 

VII.   The  Estimates:  Action  upon  in  Parliament  97 

Money  Bills  Originate  in  the  Commons 97 

Tacking 98 

Appropriations  must  be  Recommended  by  the  Executive. . .  98 

Senate  Amendments  101 

Committees  of  Supply  and  of  Ways  and  Means 102 

Debate 103 

Procedure  in  Committee  of  Supply 104 

Report  Stage  108 

Supply  Bills  110 

Adequacy  of  Consideration  of  the  Estimates  by  Parliament  111 

Increase  of  Expenditures 112 

Votes  on  Account 1 16 

Revenue  Measures  118 

Budget  Speech   1 19 

Powers  of  Private  Members 121 

Reports  of  the  Committee 122 

Supply  Bills  in  the  Senate 123 

Addresses  to  the  Crown 123 

Votes  of  Credit 124 

Private  Bill  Legislation 124 

Role  of  the  Opposition  in  Canadian  Budget  Practice 126 

VIII.   Organs    and    Officers    for   the   Administration    of   the 

Finances  135 

Parliament  as  the  Fund  Raising  and  Granting  Authority..  135 

The  Governor  in  Council 136 

The  Treasury  Board 138 

Department  of  Finance 141 

Chartered  Banks  of  Canada  as  Custodians  of  the  Public 

Funds 145 

The  Auditor  General 148 

IX.   Issue  and  Disbursement  of  Public  Funds  150 

Issue  of  Public  Moneys  from  the  Treasury 150 

Disbursement  of  Public  Funds 155 

X.   Audit  of  Public  Accounts  159 

Audit  of  Disbursements 159 

The  Treasury  Board  as  an  Organ  of  Appeals 160 

Public  Accounts  Committee 164 

XI.   The  System  of  Financial  Reports  176 

The  Estimates  .- 176 

Public  Accounts  for  the  Fiscal  Year 176 

Report  of  the  Auditor  General  for  the  Fiscal  Year 182 

Budget  Speech  of  the  Minister  of  Finance 196 

XII 


CONTENTS 

Chapter  Pace 
XII.   Political  Evils  and  Their  Effect  on  Canadian  Financial 

Administration  199 

The  Spoils  System  and  Patronage  Lists 199 

Partisan  Apportionment  of  Government  Contracts 207 

Public  Works  Expenditures  to  Further  Party  Interests 210 

Local  Improvements  at  Federal  Expense 214 

Expenditures  for  Public  Buildings  to  Further  Party  Interests  218 

Partisan  Usages  and  Practices  in  the  Provinces , .  229 

XIII.   Divergencies  of  the  Canadian  from  the  British  Budgetary 

System  and  Their  Results  233 

Executive  Control  over  Financial  Legislation 235 

Treasury  Control  over  Estimates  and  Expenditures 238 

Centralization  of  Responsibility  for  Expenditures 245 

The  System  of  Governor  General's  Warrants 248 

Expenditures  in  Excess  of  Appropriations 253 

Unexpended  Appropriations  253 

Distinction  between  Capital  and  Revenue  Accounts 255 

Supplementary  Estimates 260 

Lump  Sum  Appropriations 261 

Public  Accounts  Committee 264 

General  Political  Conditions 267 

The  Spoils  System 268 

Political  Partisanship  269 

No  Strong  "Opposition" 271 

Equilibrium  of  Revenues  and  Expenditures 272 

Growing  Power  of  the  Cabinet 276 

Provincial  Subsidy  System , 279 

Appendix 

1.  Department  of  Finance  and  Treasury  Board  Act 285 

2.  Consolidated  Revenue  and  Audit  Act 288 

3.  The  Appropriation  Act,  No.  1,  1917 329 

4.  Budget  Speech  Delivered  by  the  Minister  of  Finance,  April 

24.  1917 360 


XIII 


CHAPTER  I  ,    :r-;  :::':v:.^ 

ANALYSIS  OF  THE  PROBLEMOF 
FINANCIAL  ADMINISTRATION 

Practically  all  of  the  great  states  of  the  world,  with 
the  exception  of  the  United  States,  have  adopted  what 
is  known  as  the  budgetary  system  of  financial  ad- 
ministration.    As  stated  in  the  British  report,^  "the 
idea  underlying  the  conception  of  a  budgetary,  as 
opposed  to  a  non-budgetary,  system  is  that,  in  the 
former,  the  effort  is  made  by  those  who  are  respon- 
sible for  initiating  financial  measures  to  consider  both 
sides  of  the  national  account  at  one  and  the  same 
time,  or  at  least  in  their  relations  to  each  other,  and  to 
place  them  before  the  legislative  branch  when  appro- 
priations are  requested;  while,  in  the  latter,  no  such 
attempt  is  made.     It  is  of  the  essence  of  the  budget 
tary  system  that  the  fund-raising  and  fund-granting 
authority  shall  be  presented  with  a  balanced  state- 
ment of  estimated  receipts  and  expenditures  to  the 
end  that  it  may  see  whether  there  is  a  prospective  deficit 
to  be  provided  for,  or  a  surplus  which  may  be  applied  in 
the  way  of  reduction  of  the  national  debt  or  for  some 
other  purpose,  or  avoided  by  the  remission  of  taxation." 

This  balancing  of  receipts  and  payments  and  the 
coordination  of  estimates  for  future  expenditures 
with  the  recommendation  of  means  whereby  the 
funds  to  meet  them  may  be  obtained  by  the  govern- 
ment, is,  however,  but  a  single  element  in  the  ad- 
ministration of  the  finances  of  a  government.  It  is, 
none  the  less,  an  element  which  has  an  important  de- 

1  The  System  of  Financial  Administration  of  Great  Britain,  by  W.  F. 
Willoughby,  W.  W.  Willoughby  and  S.  M.  Lindsay,  p.  225. 


THE  CANADIAN  BUDGETARY  SYSTEM 


termining  iriffuence  upon  many  of  the  other  features 
of  the  system  of  fiiiancial  administration  of  which  it 
constitutes  a  part.  The  whole  system  itself  embraces 
the  following  steps  or  operations: 

1.  On  the  Revenue  Side 

1.  The  determination  by  the  law-enacting  authority 
of  the  ways  and  means  whereby  the  moneys  needed  by 
the  government  may  be  raised.  Generally  speaking  these 
are  by  taxes,  loans,  sales  of  public  property,  and  fees  or 
other  charges  for  public  services.  This  legislative  deter- 
mination is  practically  always  influenced,  if  not  con- 
trolled, by  estimates  made  by  the  executive  branch  of 
probable  revenues  to  be  received  from  existing  or  pro- 
posed new  sources  of  income.  Whether  or  not  modifica- 
tions in  existing  revenue  laws  shall  be  made  or  new  loans 
authorized  will  naturally  depend  in  large  part  upon  the 
expenditures  which  are  authorized  for  the  next  fiscal 
period. 

2.  The  establishment  and  operation  by  the  executive, 
acting  within  its  constitutional  or  statutory  powers,  of 
an  administrative  organization  for  the  collection  of  these 
revenues  or  the  sale  of  government  bonds,  notes,  or  other 
credit  obligations.  In  all  systems  of  responsible  govern- 
ment this  involves  the  keeping  of  accurate  records  and 
books  of  account,  the  rendering  and  publishing  of  full 
reports  of  all  transactions,  and  the  existence  of  a  system 
of  audit  and  control  to  see  that  accruing  revenues  are 
collected  and  duly  accounted  for. 

2.  On  the  Custody  Side 

I.  The  organization  and  maintenance  of  a  treasury 
system  for  the  receipt,  custody,  and  issue  to  disbursing 
officers  of  all  public  revenues. 

3.  On  the  Expenditure  Side 

I.  The  preparation  of  estimates  of  sums  needed  to 
be  expended  by  the  different  branches  of  the  government 
during  the  next  fiscal  period.     From  the  nature  of  the 

2 


FINANCIAL  ADMINISTRATION 

case,  whether  the  budgetary  system  be  adopted  or  not, 
it  is  necessary  that,  in  their  first  form  at  least,  these 
estimates  should  be  drawn  up  by  the  executive  depart- 
ments through  and  by  which  the  expenditures  are  to  be 
made.  In  connection  with  these  estimates  it  is  usual  to 
furnish  a  balance  sheet  showing  the  existing  liabilities 
and  available  assets  of  the  government. 

2.  The  consideration  of  these  estimates,  financial 
statements,  and  executive  recommendations,  if  any,  by 
the  legislature,  and,  based  upon  them,  or  upon  further 
information  obtained  by  itself,  the  authorization  of  sums 
to  be  spent  during  the  next  fiscal  period  and  the  desig- 
nation of  the  persons  by  whom,  and  the  purposes  for 
which,  they  shall  be  expended. 

3.  The  establishment  and  operation  of  an  adminis- 
trative system  through  which  the  expenditure  of  the 
sums  of  money  thus  made  available  shall  be  authorized, 
disbursed,  and  duly  accounted  for.  This  involves  the 
adoption  and  use  of  standard  forms  of  requisitions, 
vouchers,  etc.,  that  will  constitute  the  warrant  for  and 
evidence  of  all  expenditures.  There  is  also  involved 
the  keeping  of  books  of  account  in  which  all  financial 
transactions  are  entered,  with  the  several  items  duly 
segregated  according  to  the  specific  appropriations  legis- 
latively made.  There  is  further  involved,  at  least  in  all 
systems  of  responsible  governments,  the  making  periodi- 
cally of  full  reports,  based  upon  the  accounts  thus  kept, 
of  all  financial  transactions. 

4.  The  establishment  of  means  whereby  these  reports, 
when  rendered,  may  be  duly  audited  in  order  that  their 
accuracy  may  be  determined  as  well  as  the  legality  of 
each  of  the  expenditures  made.  These  audits  thus  not 
only  furnish  the  means  whereby  executive  or  adminis- 
trative superiors  determine  whether  their  subordinates 
have  faithfully  and  properly  executed  their  duties,  but, 
when  presented  to  the  legislature,  supply  the  information 
which  will  enable  that  body  to  determine  whether  or  not 
its  commands  and  instructions  have  been  duly  followed. 

3 


THE  CANADIAN  BUDGETARY  SYSTEM 

From  the  foregoing  outline  it  will  appear  that, 
simply  as  a  matter  of  accountability,  it  is  essential 
that  no  dollar  of  the  public  moneys  should  be  spent 
except  in  pursuance  of  a  legal  authorization  issued  by 
the  organ  of  government  which  gives  utterance  to 
the  public  will ;  that,  therefore,  each  official  should  be 
individually  and  personally  responsible  for  any  pay- 
ments that  he  makes;  that,  consequently,  accurate 
and  complete  financial  accounts  should  be  kept  and 
periodically  published  for  the  information  of  the  pub- 
lic and  the  guidance  of  the  legislature  or  appro- 
priating organ;  and,  finally,  in  order  that  this  in- 
dividual responsibility  may  be  made  sure,  and  the 
records  correctly  kept,  that  all  accounts  should  be  sub- 
ject to  audit  and  control. 

So  much  simply  from  the  standpoint  of  account- 
ability and  book-keeping  accuracy.  When,  from  this, 
we  turn  to  the  question  of  operative  efificiency  and 
economy  in  the  raising  and  spending  of  the  public 
funds  we  find  several  considerations  which  must 
necessarily  apply  whatever  may  be  the  specific  sys- 
tem of  financial  organization  and  administration. 

In  the  first  place  it  is  essential  that  the  revenues  and 
expenditures  of  the  government  should  be  co- 
ordinated. This  means  that  past  and  estimated 
future  returns  from  existing  sources  of  revenue 
should  be  reported  in  such  a  form  that  their  totals 
may  be  taken  into  consideration  when  the  estimates 
for  future  expenditures  are  being  considered. 

In  the  second  place  it  would  seem  to  be  essential 
that  the  recommendations  for  future  public  expendi- 
tures should  emanate  from  the  services  which  are  to 
spend  them,  for  it  is  clear  that  they  are  in  the  best 

4 


FINANCIAL  ADMINISTRATION 

position  to  know  their  own  needs.  Where,  however, 
the  question  is  whether  the  government  shall  enter 
upon  some  new  enterprise  or  activity  for  the  carrying 
out  of  which  no  existing  administrative  agency  is  com- 
petent or  appropriate,  the  case  is  stronger  that  the  legis- 
lative branch  should  itself  originate  the  project  and 
frame  the  estimates  for  the  resulting  costs. 

While  it  is  proper  that,  with  regard  to  at  least  the 
general  and  routine  operations  of  government,  each 
spending  branch  or  bureau  of  the  government  should 
make  the  original  estimate  of  its  financial  needs  for 
the  coming  fiscal  period,  it  is  equally  essential  to  the 
efficiency  and  economy  of  any  public  financial  sys- 
tem that  these  original  estimates  should  be  subject  to 
rigid  scrutiny  and  revision  by  the  superior  admin- 
istrative authorities,  and  that  all  of  these  several 
estimates,  thus  revised,  should  be  brought  together 
and  again  revised  so  as  to  maintain  a  proper  propor- 
tion between  the  several  sums  asked  for,  and  to  bring 
their  totals  into  harmony  with  the  general  needs  and 
resources  of  the  government. 

The  need  in  any  system  of  financial  administration 
for  this  revision  and  coordination  of  the  original 
estimates  of  various  bureaus  and  departments  is  due 
to  two  facts,  the  one  of  knowledge,  and  the  other 
psychological,  as  characteristic  of  human  nature  itself. 
As  regards  the  matter  of  knowledge,  it  is  clear  that 
the  heads  of  the  several  subdivisions  of  the  administra- 
tive service  cannot  be  expected  to  have  exact  in- 
formation as  to  the  needs  of  services  other  than  their 
own  or  of  the  government  as  a  whole.  As  regards 
the  psychological  or  subjective  element,  it  is  but  natural, 
and  indeed  laudable,  that  each  head  of  a  bureau  should 

S 


THE  CANADIAN  BUDGETARY  SYSTEM   . 

emphasize  the  value  of  the  service  which  he  directs  and 
seek  to  increase  its  scope  and  importance  and,  therefore, 
be  disposed  to  ask  for  corresponding  financial  support. 
It  is  thus  to  be  expected  that  he  will  ask  for  all  that  he 
can  possibly  hope  to  get  without  regard  to  the  demands 
of  the  other  services. 

A  third  feature  essential  to  the  efficiency  of  any 
system  of  national  finance  is  that  the  legislative  or 
appropriating  body  should  not  specify  in  such  detail 
the  manner  in  which  and  the  purposes  for  which  the  sums 
appropriated  shall  be  spent  that  those  who  direct  the 
spending  services  are  left  with  so  slight  discretionary 
powers  that  they  are  not  able  to  make  their  expendi- 
tures conform  to  the  exact  needs  of  their  services,  as 
they  are  revealed  from  day  to  day  in  the  course  of 
actual  administration.  It  is  essential  that  the  fund- 
granting  authority  should  demand  a  complete  ac- 
counting down  to  small  details  of  all  sums  spent,  and 
that  abundant  opportunity  should  exist  for  criticism 
upon  its  part  of  everything  that  is  done.  But  it  is 
fatal  to  real  administrative  efficiency  for  the  legisla- 
tive body  to  deny  a  reasonable  degree  of  discretionary 
power  to  its  administrative  agents. 

A  fourth  prime  feature  of  an  efficient  and  econom- 
ical administration  of  the  financial  affairs  of  a  state, 
is  that  the  right  or  opportunity  should  not  be  given  to 
the  legislature  or  to  its  individual  members  to  add 
items  of  expenditures  to,  or  to  suggest  increases  in  those 
items  contained  in  the  estimates  or  recommendations  of 
the  executive  spending  departments. 

The  experience  of  France  and  the  United  States  is 
eloquent  testimony  as  to  this.  Even  -in  England, 
w^here   this    right    of   increasing   the   appropriation 

6 


FINANCIAL  ADMINISTRATION 

asked  for  does  not  exist,  there  is  evidence  that,  so  far 
as  the  House  of  Commons  is  able  to  use  pressure  or 
influence,  it  is  not  in  the  direction  of  economy.  Thus, 
for  example,  in  the  very  able  report  of  a  Select  Com- 
mittee on  National  Expenditure,  made  in  1903,  the 
statement  is  made  that  "eight  witnesses  who  have 
had  special  opportunities  of  noticing  the  effect  of  dis- 
cussions in  the  Committee  of  the  House  of  Commons 
on  Supply  gave  it  as  their  opinion  that  for  many  years 
past  the  result  was  to  urge  increased  not  decreased  ex- 
penditures." 

It  will  be  found  that  in  Canada,  as  in  England,  the 
right  of  the  House  of  Commons  to  vote  appro- 
priations greater  than  those  asked  for  by  the  Execu- 
tive does  not  exist,  but,  unfortunately,  it  would  ap- 
pear that  the  Government  in  making  up  its  estimates 
does  not  resist  the  ''pork  barrel"  influences  which, 
upon  the  legislative  side,  have  been  so  conspicuous  in 
France  and  the  United  States.  One  of  the  interesting 
points  of  the  present  inquiry  will  therefore  be  to  de- 
termine, if  possible,  why  this  unsatisfactory  feature 
should  have  found  a  place  in  the  Canadian  and  not 
in  the  English  system. 

The  foregoing  prime  essentials  of  an  efficient 
financial  system  have  been  mentioned  in  this  intro- 
ductory chapter  not  with  the  view  of  discussing  com- 
prehensively the  problem,  but  only  that  they  may  be 
especially  borne  in  mind  when  examining  and  passing 
judgment  upon  the  detailed  description  of  the  Cana- 
dian system  which  is  to  follow,^ 

1  For  a  fuller  consideration  of  this  question  see  "The  Problem  of  a 
National  Budget,"  by  W.  F.  Willoughby.  Studies  in  Administration^ 
Institute  for  Government  Research,  1917. 


CHAPTER  II 

THE  CANADIAN  CONSTITUTIONAL 
SYSTEM 

The  document  which  serves  as  the  Constitution  of 
the  Dominion  of  Canada  and  provides  for  the  federal 
union  of  the  constituent  Provinces  is  the  British 
North  America  Act  enacted  in  1867  by  the  British 
Parliament. 

When  created,  the  Dominion  consisted  of  the  four 
Provinces  of  Ontario,  Quebec,  Nova  Scotia  and  New 
Brunswick.  Since  that  time  the  Provinces  of  Mani- 
toba, British  Columbia  and  Prince  Edward  Island 
have  been  admitted  to  the  Federation,  and  the  Prov- 
inces of  Saskatchewan  and  Alberta  formed  out  of  the 
great  territories  subject  to  the  jurisdiction  of  the 
Dominion.  There  are  now,  therefore,  nine  Prov- 
inces in  the  Union,  while  still  under  "territorial"  juris- 
diction are  the  district  of  the  Yukon  and  the  Great 
Northwest  Territory  which  embraces  approximately 
a  million  and  a  quarter  square  miles. 

Relations  between  the  Dominion  and  the  Provinces. 

Though  resembling  the  Constitution  of  the  United 
States  in  that  provision  is  made  for  a  federation  of 
autonomous  bodies-politic  under  one  superior  gov- 
ernment, there  are  certain  important  differences  dis- 
tinguishing the  two  instruments  of  government 
which  need  to  be  pointed  out. 

In  the  first  place  the  British  North  America  Act 
itself  outlines  the  governments  to  be  enjoyed  by  the 
Provinces,  whereas,  as  is  well  known,  the  only  pro- 
vision of  the  United  States  Constitution  with  refer- 

8 


CANADIAN  CONSTITUTIONAL  SYSTEM 

ence  to  the  governments  of  the  individual  states  is 
that  they  shall  be  republican  in  form.  Thus  the 
Canadian  instrument  provides  that  in  each  province 
there  shall  be  a  Lieutenant  Governor  appointed  by 
the  Governor  General  of  Canada  and,  after  five  years, 
removable  for  cause.  Ontario  is  given  a  unicameral 
legislature  to  be  elected  according  to  provisions  set 
forth  in  the  act.  Quebec  is  given  a  bicameral  cham- 
ber, the  members  of  which  are  to  be  elected  according 
to  the  methods  stated  in  the  act.  The  existing  legis- 
latures of  Nova  Scotia  and  New  Brunswick  are 
continued. 

The  establishment  by  the  British  North  America 
Act  of  the  provincial  legislatures  and  the  offices  of 
the  Lieutenant  Governors  gives  to  the  Provinces,  in 
a  formal  sense,  a  status  equal  to  that  of  the  Dominion 
government  since  they  derive  their  being  and  powers 
from  the  same  source.  When,  however,  we  consider 
that  the  Lieutenant  Governors  are  appointed  by  the 
Governor  General  of  the  Dominion,  and  that  there  is 
given  to  the  central  government  the  right  to  disallow 
provincial  acts,  it  is  seen  that  in  these  respects  at 
least  the  Canadian  Provinces  occupy  a  position  in- 
ferior to  that  enjoyed  by  the  states  of  the  American 
Union. 

This  right  of  disallowance  is  one  which  may  be 
exercised  not  merely  upon  the  ground  that  the  prov- 
incial acts  are  ultra  vires,  as  tested  by  the  British 
North  America  Act,  but  because  they  are  deemed 
unwise  or  unjust,  or  inconsistent  with  imperial  British 
interests.  It  is,  however,  to  be  observed  that,  for- 
saking the  earlier  practice,  the  established  doctrine 
of  recent  years  is  that  provincial  acts  shall  not  be  dis- 

9 


THE  CANADIAN  BUDGETARY  SYSTEM 

allowed  except  upon  grounds  of  unconstitutionality 
or  of  prejudice  to  general  dominion  or  imperial  in- 
terests. And  even  as  regards  constitutionality,  the 
practice  is,  except  in  very  clear  cases,  to  allow  this  to 
be  settled  by  the  courts. 

The  Judiciary.  In  several  other  important  respects 
the  Canadian  federation  is  a  more  centralized  one  than 
is  the  American.  All  the  judges,  except  of  the  probate 
courts,  are  appointed  by  the  Dominion  government. 
They  hold  office  during  good  behavior  and  have  their 
salaries  fixed  by  the  Dominion  Parliament.^ 

The  Act  of  1867  provided  for  the  establishment  of 
a  Dominion  Court  of  Appeals  and  for  such  other 
tribunals  as  might  be  needed  for  the  due  administra- 
tion of  the  laws  of  Canada.  In  pursuance  of  the 
authority  thus  granted,  the  Parliament  in  1875  estab- 
lished two  tribunals,  the  one  known  as  the  Supreme 
Court  of  Canada  and  the  other  as  the  Exchequer 
Court  of  Canada. 

Besides  a  comprehensive  appellate  jurisdiction 
over  the  judgments  and  decrees  of  provincial  courts 
in  matters  both  civil  and  criminal,  the  Supreme  Court 
has  authority  to  adjudicate  controversies  between 
the  Dominion  and  provincial  authorities  and,  upon 
request  of  their  respective  legislatures,  between  the 
Provinces  themselves.  To  this  court  also  the  Gov- 
ernor General  in  Council  may  refer  certain  constitu- 
tional questions  for  its  opinion.  To  it  also  come  ap- 
peals from  the  Exchequer  Court.  In  criminal  cases 
the  judgments  of  the  Supreme  Court  are  final.  From 
judgments  on  appeal  from  the  Exchequer  Court  in 

^  It  is  provided  that  the  judges  shall  be  selected  from  the  bar  of  the 
Province  in  which  they  are  to  sit. 

10 


CANADIAN  CONSTITUTIONAL  SYSTEM 

Admiralty  cases,  an  appeal  lies  of  right  to  the  Judicial 
Committee  of  the  Privy  Council  in  England.  In  all 
other  cases  an  appeal  to  the  Judicial  Committee  lies 
only  after  leave  from  that  body  is  obtained.  It  may 
also  be  added  that,  upon  leave  obtained,  appeals  to 
the  Judicial  Committee  may  be  taken  from  the 
judgments  of  the  courts  of  the  Provinces.  The 
Supreme  Court  consists  of  a  Chief  Justice  and  five 
puisne  judges. 

Until  1887  the  judges  of  the  Supreme  Court  acted 
as  judges  of  the  Exchequer  Court.  In  that  year, 
however,  because  of  the  great  growth  of  exchequer 
business,  it  was  found  necessary  to  set  up  a  wholly 
independent  court,  presided  over  by  a  single  judge 
with  a  jurisdiction  relating  especially  to  claims 
against  the  state  or  actions  brought  by  or  on  behalf 
of  the  government  for  the  recovery  of  fines  and  for- 
feitures. 

By  later  acts  the  jurisdiction  of  the  court  has  been 
extended  to  cover  matters  of  admiralty  and  prize, 
patent  infringements,  copyrights  and  trademarks, 
and,  in  certain  cases,  the  ordering  of  the  sale  of  in- 
solvent railways.  In  1912  an  assistant  judge  was 
provided.  For  convenience  to  the  suitors  the  court 
holds  sessions  in  different  parts  of  the  Dominion. 

Distribution  of  Legislative  Powers  in  the  Dominion. 
As  regards  the  distribution  of  legislative  powers  between 
the  Dominion  and  the  Provinces,  the  British  North 
America  Act  pursues  a  different  method  from  that 
of  the  American  Constitution.  In  the  United  States, 
as  is  well  known,  the  Congress  possesses  only  those 
powers  which  are  enumerated,  including  those  im- 

II 


THB:  CANADIAN  BUDGETARY  SYSTEM 

plied  as  "necessary  and  convenient'*  for  carrying  the 
specified  powers  into  execution.  To  the  states  or  to 
the  peoples  thereof  are  expressly  reserved  all  legisla- 
tive authority  not  thus  granted.  In  the  Canadian  in- 
strument, however,  the  attempt  seems  to  have  been  made 
by  its  framers  to  divide  the  entire  legislative  domain 
between  the  Provinces  and  the  Central  Government, 
so  that  the  two  fields  thus  marked  out  would  be 
mutually  exclusive  and  collectively  comprehensive 
and  making  neither  one  the  residuary  possessor  of 
all  unenumerated  powers.  Thus,  we  find  a  careful 
enumeration  of  the  provincial  as  well  as  of  the 
Dominion  legislative  powers.  To  the  enumeration 
of  provincial  powers  there  is  added  the  grant  "gen- 
erally of  all  matters  of  a  merely  local  or  private  nature 
in  the  Province."^ 

The  enumeration  of  powers  exclusively  granted  to 
the  Dominion  Parliament  is  introduced  by  the  state- 
ment that  the  Dominion  Parliament  shall  have  the 
power  to  "make  laws  for  the  peace,  order,  and  good 
government  of  Canada  in  relation  to  all  matters  not 
coming  within  the  classes  of  subjects  by  this  Act  as- 
signed exclusively  to  the  legislatures  of  the  Prov- 
inces; and  for  greater  certainty,  but  not  so  as  to 
restrict  the  generality  of  the  foregoing  terms  of  this 
section,  it  is  hereby  declared  that  (notwithstanding 
anything  in  this  act)  the  exclusive  legislative  au- 
thority of  the  Parliament  of  Canada  extends  to  all 
matters  coming  within  the  classes  of  subjects  next 
hereinafter  enumerated;"  and  the  enumeration  con- 
cludes with  the  statement  that  "any  matter  coming 

1  British  North  America  Act,  Section  92,  par.  16. 

12 


CANADIAN  CONSTITUTIONAL  SYSTEM 

within  any  of  the  classes  of  subjects  enumerated  in 
this  section  shall  not  be  deemed  to  come  within  the 
class  of  matters  of  a  local  or  provincial  nature  comprised 
in  the  enumeration  of  the  classes  of  subjects  by  this  Act 
assigned  exclusively  to  the  legislatures  of  the  Prov- 
inces/'^ 

It  would  appear  from  the  provisions  which  have 
been  quoted  that  the  intention  was  that  the  Provinces 
were  to  have  legislative  power  with  reference  to  all 
unenumerated  powers  of  a  purely  local  character.  It 
is  not  so  clearly  stated  that  the  Dominion  Parliament 
was  to  have  legislative  authority  with  reference  to 
all  matters  of  a  general  or  dominion  interest.  In 
fact,  however,  the  words  which  have  been  quoted, 
that  the  dominion  legislative  power  should  extend  to 
the  making  of  laws  for  the  ''peace,  order,  and  good 
government  of  Canada"  taken  in  connection  with  the 
statement  that  the  enumeration  of  specific  powers  is 
not  to  be  construed  as  limiting  the  generality  of  the 
preceding  terms  of  the  section,  have  been  construed 
as  giving  to  the  Dominion  comprehensive  authority 
to  enact  all  laws  which  relate  to  matters  of  a  general 
as  distinguished  from  a  purely  local  or  provincial 
character.  It  is  thus  seen  that,  in  fact,  the  Dominion 
is  as  much  the  residual  claimant  to  all  general  legis- 
lative powers  as  are  the  Provinces  to  purely  local 
legislative  powers.  In  effect,  then,  as  regards  un- 
enumerated powers  the  Dominion  government  is  in 
a  far  stronger  position  than  is  the  National  govern- 

^  British  North  America  Act,  Section  91. 

Section  93  makes  special  provision  regarding  laws  in  relation  to 
education;  Section  94  makes  provision  for  the  bringing  about  of  uni- 
formity of  laws  of  the  Provinces  relating  to  civil  and  property  rights; 
and  Section  95  provides  that  the  Dominion  and  Provinces  shall  have 
concurrent  jurisdiction  with  regard  to  the  control  of  Agriculture  and 
Immigration. 

13 


THE  CANADIAN  BUDGETARY  SYSTEM 

ment  of  the  United  States.  And,  as  regards  the  set- 
tlement of  disputes  as  to  whether  a  given  matter  may 
be  deemed  of  provincial  or  dominion  interest,  the 
final  word  is  with  the  Supreme  Court  of  the  Dominion 
or  with  the  Judicial  Committee  of  the  English  Privy 
Council. 

It  is  furthermore  to  be  observed  that  the  expressly 
granted  dominion  powers  include  important  subjects 
that,  under  the  American  system,  are  not  given  to  the 
general  government.  Thus  they  include  the  general 
regulation  of  trade  and  commerce,  quarantine,  sea- 
coast  and  inland  fisheries,  banking,  incorporation  of 
banks  and  the  issue  of  paper  money,  savings  banks, 
bills  of  exchange  and  promissory  notes,  interest,  bank- 
ruptcy, marriage  and  divorce,^  and,  comprehensively 
"the  criminal  law,  except  the  constitution  of  courts 
of  criminal  jurisdiction,  but  including  the  procedure 
in  criminal  matters." 

The  predominance  of  dominion  over  provincial 
legislation  where  a  conflict  exists  has  been  repeatedly 
affirmed  by  the  English  Privy  Council.^ 

Totality  of  Legislative  Power  Granted.  Another 
feature  which  sharply  distinguishes  the  Canadian 
from  the  American  system  is  the  principle  that  the 
dominion  and  provincial  legislatures  together  possess 
the  totality  of  legislative  power,  except  so  far,  of 
course,  as  it  is  reserved  by  the  British  Parliament 
itself.     In  other  words  there  is  not  in  Canada,  as 

*  The  Provinces  are  granted  authority  to  legislate  with  reference  to 
"the  solemnization  of  marriage  in  the  Provinces."  The  harmonizing  of 
this  provision  with  the  dominion  grant  of  jurisdiction  over  marriage  and 
divorce  has  given  rise  to  not  a  little  controversy. 

'  See  for  example,  Attorney  General  of  Ontario  v.  Attorney  General 
of  Canada,  1894  Appeal  cases  189;  La  Compagnie  Hydraulic  v.  Con- 
tinental Heat  and  Ligiit  Co.,  1909  Appeal  cases  194. 

14 


CANADIAN  CONSTITUTIONAL  SYSTEM 

there  is  in  the  United  States,  a  field  of  individual 
rights  which  the  legislative  authority  may  not  enter. 
As  stated  by  an  eminent  Canadian  constitutional 
commentator:  ''The  scheme  of  our  Federation  Act 
was  to  have  no  reserved  power,  but  that  there  should 
be,  in  Canada,  the  same  kind  of  legislative  power  as 
there  is  in  the  British  Parliament,  so  far  as  that  was 
consistent  with  the  confederation  of  the  Provinces 
and  our  position  as  a  Dominion  within  the  Empire. 
.  .  .  Here  then,  again,  the  franicrs  of  the  British 
North  America  Act  have  been  faithful  to  the  state- 
ment in  the  preamble  of  the  Act,  that  it  was  passed  to 
carry  out  the  expressed  wish  of  the  legislatures  of  the 
dififerent  Provinces  of  Canada,  that  they  should  be 
federally  united  'with  a  constitution  similar  in  prin- 
ciple to  that  of  the  United  Kingdom.'  "^ 

Cabinet  Government  in  Canada.  The  Act  of  1867 
does  not  make  specific  provision  for  the  institution  in 
Canada  of  responsible  parliamentary  government  as 
it  exists  in  the  United  Kingdom,  but  it  was  well  un- 
derstood that  this  form  of  rule  which  already  existed 
in  the  Provinces  should  be  continued  in  them  and  in- 
stituted in  the  dominion  government  which  was  to 
be  estabhshed.  This,  in  fact,  was  the  special  mean- 
ing of  the  provision  that  Canada  was  to  have  a  con- 
stitution similar  to  that  of  the  mother  country.  This 
expectation  has  been  realized;  and,  although  it  can- 
not be  said  that  the  cabinet  system  has  developed  in 
Canada  exactly  as  it  has  in  Great  Britain,  it  is  suf- 
ficient for  the  purposes  of  this  report  to  say  that  in 
Canada  we  have  to  deal  with  governments  of  the 
English  parliamentary  type.     And  thus  it  is  to  be  re- 

'  Lefroy,  Canada's  Federal  System,  p.  95. 

15 


THE  CANADIAN  BUDGETARY  SYSTEM 

membered  that  when  the  Governor  General  who 
represents  the  Crown  in  Canada,  and  the  Lieutenants 
who  act  in  a  similar  representative  character  in  the 
Provinces,  are  spoken  of  as  doing  or  authorized  to  do 
a  given  act,  it  is  meant  that,  in  fact,  the  act  represents 
the  will  of  cabinets  of  ministers  politically  responsible 
to  their  respective  legislatures. 

Imperial  Control.  With  regard  to  the  extent  to 
which  the  Canadian  governments  are  subject  to 
British  imperial  control  it  will  not  be  necessary  to  say 
more  than  that,  whatever  may  be  technical  legal  com- 
petence of  the  imperial  government,  in  assured  fact 
Canada  has  complete  independence  of  action  with 
regard  to  all  matters  which  relate  to  Canadian  in- 
terests and  which  do  not  conflict  with  imperial 
policies.  And  this  actual  independence  has  been 
constantly  increasing,  and  in  practice  is  now  con- 
strued to  extend  to  matters  which  for  many  years 
were  regarded  as  primarily  imperial  in  character  and 
therefore  reserved  for  British  imperial  control.  Thus 
laws  governing  navigation,  immigration,  tariffs,  and 
naturalization  are  now  held  to  be  within  the  com- 
petency of  the  Dominion  and  even  as  to  treaties  the 
established  doctrine  is  that  other  than  purely  political 
connections  entered  into  by  Great  Britain  shall 
obtain  the  approval  of  Canada  before  being  made  ap- 
plicable to  that  country.  And  furthermore,  Canada, 
acting  nominally  through  the  British  foreign  office 
or  a  British  diplomatic  agent,  has  negotiated  and 
entered  into  special  agreements  with  foreign  powers. 

Disregarding,  then,  juristic  refinements,  the 
Dominion  of  Canada  may,  for  the  purpose  of  this  re- 

i6 


CANADIAN  CONSTITUTIONAL  SYSTEM 

port,  as  well  as  for  many  other  matters,  be  regarded 
as  an  independent  sovereign  state. 

The  special  financial  relations  which  exist  between 
the  Dominion  and  its  constituent  Provinces  will  be 
considered  as  a  special  topic  in  the  chapter  that 
follows: 

Outline  of  Dominion  Government.  It  is  provided 
by  the  Constituent  Act  of  1867  that  the  executive 
authority  of  the  Dominion  shall  be  vested  in  the  King 
of  Great  Britain  and  Ireland  and  carried  on  in  his 
name  by  a  Governor  General  aided  by  a  Privy  Council. 
The  functions  of  the  Governor  General,  who  is  ap- 
pointed by  the  Crown,  are  almost  wholly  formal  in 
character.  He  has  in  Canada  no  more  independent 
discretionary  powers  than  has  the  King  in  England. 
His  ministers,  as  in  England,  are  members  of  his 
Privy  Council  and  the  acts  authorized  in  his  name, 
even  when  partaking  of  a  prerogative  character,  are 
the  result  of  advice  given  to  him  by  his  ministers. 
These,  in  conformity  with  the  principles  of  cabinet 
government,  are  members  of  Parliament  and  remain 
in  office  only  so  long  as  they  are  able  to  retain  the  sup- 
port of  a  majority  in  the  Lower  House.  The  Privy 
Council  at  present  (1917)  consists  of  a  premier  and 
president,  and  the  heads  of  fourteen  executive  depart- 
ments, together  with  several  ministers  without  port- 
folios.^ 

The  Parliament  of  Canada  consists  of  two  houses, 
the  Senate  and  House  of  Commons.     The  members 

1  British  North  America  Act  1867.  Section  11.  "There  shall  be  a 
council  to  aid  and  advise  the  Government  of  Canada,  to  be  styled  the 
Queen's  Privy  Council  for  Canada,  and  the  persons  who  are  to  be  mem- 
bers of  that  Council  shall  be  from  time  to  time  chosen  and  summoned  by 
the  Governor  General  and  sworn  in  as  privy  councillors,  and  members 
thereof  may  be  from  time  to  time  removed  by  the  Governor  General." 

17 


THE  CANADIAN  BUDGETARY  SYSTEM 

of  the  Senate  are  appointed  for  life  by  the  Governor 
General,  acting  of  course  upon  the  advice  of  the 
Ministry  of  the  day.  In  practically  all  cases  the 
ministry  in  power  have  nominated  persons  of  their 
own  political  faith,  with  the  result  that  the  political 
complexion  of  the  Senate  has  varied  according  to  the 
political  party  which  has  remained  for  any  length  of 
time  in  power.  There  are  now  eighty-seven  senators, 
who  are  apportioned  among  the  Provinces  roughly 
according  to  their  respective  populations.  The 
speaker  of  the  Senate  is  appointed  and  removable  by 
the  Governor  General  from  among  the  members  of 
that  body. 

The  members  of  the  House  of  Commons  are 
elected  by  popular  vote  for  terms  of  five  years.  It 
is  provided  that  the  Province  of  Quebec  shall  always 
have  sixty-five  members  and  the  other  Provinces 
proportionately  according  to  their  respective  popula- 
tions. At  present  (1917)  there  are  two  hundred  and 
thirty-five  members.  As  in  the  United  States,  the 
qualifications  for  voting  for  members  of  Parliament 
are  fixed  by  the  Provinces,  and  they  vary  somewhat 
in  the  different  Provinces.  The  House  elects  its  own 
speaker. 

The  Senate  has  exactly  the  same  powers  with  respect 
to  legislation  as  has  the  lower  branch  except  that  ''bills 
for  appropriating  any  part  of  the  public  revenue,  or  for 
imposing  any  tax  or  impost,  shall  originate  in  the  House 
of  Commons."^ 

The  attitude  of  the  Senate  towards  financial  meas- 
ures coming  to  it  from  the  House  of  Commons  will 
be  specifically  described  in  Chapter  VII  in  which  will 

1  British  North  America  Act,  1867,  Section  53. 

18 


CANADIAN  CONSTITUTIONAL  SYSTEIM 

be  considered  the  legislative  procedure  with  re- 
lation to  money  bills.  It  will  there  be  seen  that  since 
1870  the  Senate  has  made  no  attempt  to  defeat  a  tax 
or  appropriation  act.  With  regard  to  other  matters, 
and  many  of  them  of  considerable  importance,  the 
Senate  has  opposed  its  will  and  persisted  in  its  oppo- 
sition. Thus  in  1913  the  Senate  defeated  the  very 
important  measure  passed  by  the  House  authorizing 
the  giving  of  assistance  by  Canada  to  the  naval  forces 
of  the  Empire.^ 

The  Governor  General  is  given  the  right  to  appoint 
a  small  number  of  additional  senators  in  order  that 
aid  may  thus  be  given  the  ministry  in  power  to  over- 
come the  resistance  of  the  Senate  to  the  will  of  the 
Commons.  This  right  has  not,  however,  been  ex- 
ercised. Practice  has  established  the  rule  that  the 
Senate  shall  not  amend  a  money  bill  sent  to  it  by  the 
Lower  House. 

^  For  a  list  of  other  instances  of  Senatorial  opposition  to  the  House 
see  Bourinot,  Parliamentary  Procedure  and  Practice  in  the  Dominion  of 
Canada,  4th  ed.,  1916,  p.  286.  See  also  Riddell,  The  Constitution  of 
Canada  in  Its  Historical  and  Practical  Working. 


19 


CHAPTER  III 

CONTROL  OF  GOVERNMENT  EXPENDI- 
TURES BEFORE  CONFEDERATION: 
PROVINCIAL  SUBSIDIES 

To  understand  the  present  system  of  financial  ad- 
ministration in  Canada  and  especially  the  matter  of 
Dominion  subsidies  to  the  Provinces  it  will  be  neces- 
sary to  describe  briefly  certain  conditions  existing 
prior  to  the  enactment  of  the  British  North  America 
Act  of  1867. 

History  of  French  Canada — 1763-1812:  Executive 
Absolutism  over  Public  Receipts  and  Expenditures. 

For  more  than  two  centuries  a  French  colony,  Can- 
ada became  a  part  of  the  British  Empire  by  the 
treaty  of  1763.  Besides  being  assured  in  the  pos- 
session of  their  property  and  privileges  and  permitted 
to  observe  their  religion,  the  inhabitants  obtained  the 
benefits  of  British  criminal  law  which  was  less  harsh 
than  that  of  France.  They  were  also  promised  a 
representative  form  of  government  in  place  of  the 
absolutism  previously  exercised  by  the  French  kings. 
As  under  the  French  regime,  the  territorial  or  casual 
revenues  were  reserved  to  the  Crown.  These  con- 
sisted of  certain  seigniorial  dues,  the  income  derived 
from  the  Jesuits'  estates  and  proceeds  of  the  sale  of  gov- 
ernment timber  and  land.  The  right  of  levying 
taxes  and  of  regulating  the  trade  and  commerce  of 
the  colony  was  deemed  to  be  vested  in  the  British 
Parliament. 

When  the  outbreak  of  the  American  Revolution 
appeared  imminent,  British  statesmen-considered  it 
prudent  to  grant  additional  concessions  to  the  French 

20 


GOVERNMENT  EXPENDITURES 

Canadians  and  thus  to  make  sure  of  their  loyalty  to 
the  British  Crown.  Accordingly  the  so-called 
Quebec  Act  was  passed  in  1774,  which  in  reality  con- 
sisted of  two  separate  enactments.  One  of  these 
imposed  certain  duties  on  spirits  and  molasses  to  be 
expended  solely  by  the  Crown  in  order  to  provide  a 
revenue  "towards  defraying  the  expenses  of  the  ad- 
ministration of  justice  and  the  support  of  the  civil 
government  of  the  Province/*  The  other  statute 
gave  a  form  of  government.  Complete  religious 
liberty  was  granted'  to  adherents  of  the  Roman 
Catholic  Church;  an  appointive  legislative  council 
was  created  with  full  legislative  powers,  except  in 
matters  of  taxation;  and  the  old  French  law  based  on 
the  Coutume  de  Paris  was  reestablished.  The  fate- 
ful consequencies  of  this  last  provision  were  not  fore- 
seen— that  it  would  revive  and  perpetuate  French  in- 
stitutions in  Canada  and  would  halt  the  assimilation 
of  the  French  and  English  colonists. 

During  the  American  Revolution  a  migration  of 
expelled  loyalists  took  place  from  the  United  States 
to  Canada;  and,  after  the  peace  of  1783  many  others 
followed  who  did  not  wish  to  lose  their  British  citi- 
zenship. A  large  number  of  these  established  them- 
selves in  the  western  part  of  the  Province  beyond  the 
region  of  French  settlements.  As  these  western  set- 
tlers were  disinclined  to  conform  to  French  customs 
and  regulations,  the  British  Ministry  decided  in  1791 
to  divide  the  colony  into  two  portions.  The  point 
at  which  the  land  grants  of  the  French  Crown  ceased 
was  taken  as  the  line  of  division.  All  the  territory  to 
the  east  continued  to  be  held  under  French  tenure 

21 


THE  CANADIAN  BUDGETARY  SYSTEM 

and  was  called  Lower  Canada,  while  that  to  the  west 
was  governed  by  English  laws  and  was  designated 
Upper  Canada.  The  effect  of  this  legislation  was  to 
accentuate  the  isolation  of  the  French  Canadians 
from  the  English  speaking  element  of  the  population 
and  to  keep  their  sense  of  nationality  all  the  more 
alive. 

Legislature's  Restricted  Taxing  Powers.     The  act 

of  1 791  established  a  representative  form  of  govern- 
ment for  the  two  Provinces.  .Each  was  granted  a 
legislature  made  up  of  an  elective  house  of  assembly 
and  of  a  legislative  council.  The  members  of  this 
last  named  body  were  appointed  for  life  by  the 
Crown,  which  also  named  the  Governor  General  for 
Lower  and  a  Lieutenant  Governor  for  Upper  Canada. 
The  British  Parliament  reserved  to  itself,  however, 
the  right  to  regulate  the  trade  and  commerce  of  the 
two  Canadas  and  to  determine  what  navigation  dues 
should  be  paid.  In  addition,  the  duties  imposed  by 
the  Quebec  Act  of  1774  continued  to  remain  in  force 
and  could  not  be  repealed  by  the  local  legislature. 
Besides  the  income  from  this  source,  the  territorial 
revenues  were  under  the  exclusive  control  of  the 
executive  government,  and  the  Houses  of  Assembly 
had  only  the  right  to  dispose  of  the  proceeds  of  such 
imposts  as  were  collected  under  the  authority  of  laws 
enacted  by  the  legislature  itself.  Thus,  with  fixed 
and  permanent  sources  of  revenues  at  its  command, 
the  executive  branch  of  the  government  was  almost 
entirely  independent  of  the  legislature.  In  case  the 
royal  revenues  proved  insufficient  to  defray  all  the 
expenses  of  the  government,  recourse  was  had  to 

22 


GOVERNMENT  EXPENDITURES 

imperial  funds  and  the  deficit  was  covered  by  the 
English  military  exchequer.  This  state  of  affairs 
continued  without  any  marked  change  until  the  war 
of  1812. 

Conflict  between  Executive  and  Legislature  over 
Control  of  Taxation  and  Appropriations:  1812-1830. 
With  the  growth  of  the  population  in  the  two  Can- 
adas  after  1800,  the  royal  revenues  began  to  prove 
more  and  more  inadequate  to  meet  the  increasing 
expense  of  administering  the  affairs  of  the  Provinces. 
On  the  other  hand,  the  purely  provincial  revenues  col- 
lected under  the  authorization  of  the  local  legislature 
showed  a  handsome  surplus  over  the  required  ex- 
penditures. As  before  mentioned,  it  was  the  custom 
of  the  authorities  to  cover  the  deficit  between  the 
actual  annual  expenditure  and  the  permanent  revenue 
appropriated  by  Parliament  towards  its  discharge 
out  of  the  grant  made  by  the  imperial  government 
for  the  support  of  the  army.  When  the  war  of  1812 
made  the  customary  resort  to  miHtary  funds  im- 
possible, the  government  met  the  deficit  in  its  finances 
by  borrowing  from  the  surplus  moneys  of  the  Prov- 
inces without  first  obtaining  the  consent  of  their  re- 
spective legislatures. 

As  the  spending  of  the  provincial  funds  upon 
services  for  which  no  legislative  appropriations  had 
been  made  was  highly  irregular,  the  British  Governor 
General  felt  constrained  in  1817  to  ask  the  local  Par- 
Haments  officially  to  sanction  such  illegal  outlays. 
Since  the  sources  of  permanent  revenue  did  not  equal 
the  annual  permanent  charges  for  the  provincial  civil 
list,  the  executive  branch  was  compelled  to  ask  the 

23 


THE  CANADIAN  BUDGETARY  SYSTEM 

legislature  from  this  time  on  for  an  annual  grant  of 
funds  to  help  defray  the  expenses  of  the  government. 
This  marked  the  beginning  of  a  long  and  bitter  con- 
stitutional struggle  for  the  control  of  the  pubHc  purse- 
strings  between  the  appointees  of  the  Crown  and  the 
elected  representatives  of  the  people. 

When  this  contest  began,  considerable  dissatisfac- 
tion had  already  manifested  itself  on  account  of  the 
action  of  the  Government  in  naming  only  a  certain 
favored  group  for  office.  The  distribution  of  all  the 
political  patronage  of  the  Provinces  was  in  the  hands 
of  the  Governor  General  and  the  British  Ministry  and 
was  used  in  Upper  Canada  to  further  the  interests  of 
a  political  and  aristocratic  combination  known  as  the 
Family  Compact.  This  body  held  possession  of  all 
government  offices  to  the  exclusion  of  those  favored 
by  the  mass  of  the  voters.  In  Lower  Canada,  the 
numerically  much  superior  French  Canadian  element 
formed  the  proscribed  class  and  was  denied  appoint- 
ment to  office.  Besides  causing  intense  party  dif- 
ferences, this  inequitable  attitude  of  the  governing 
circle  accentuated  an  already  present  and  unfortunate 
race  antagonism. 

As  one  means  of  obtaining  proper  recognition  at 
the  hands  of  the  Government,  the  leaders  of  the 
popular  side  in  the  Houses  of  Assembly  endeavored 
to  exercise  sole  control  over  both  the  funds  levied 
under  the  statutes  passed  by  the  legislature  itself  and 
the  proceeds  of  the  duties  imposed  and  regulated  by 
the  acts  of  the  British  Parliament.  They  therefore 
asserted  the  right  to  control  the  revenues  of  the 

24 


GOVERNMENT  EXPENDITURES 

Crown  and  to  vote  the  money  for  each  item  of  ex- 
penditure. In  this  move,  hov^ever,  they  were 
strenuously  opposed  by  the  Governors  General,  who 
regarded  their  proceedings  as  an  unlawful  invasion 
of  the  royal  prerogative.  Since  the  tenure  of  office 
of  those  officials  was  dependent  on  the  Crown  alone, 
they  deemed  it  their  duty  zealously  to  uphold  the 
privileges  of  the  Crown  against  any  encroachments 
on  the  part  of  the  provincial  legislatures. 

Unable  to  bring  any  pressure  to  bear  on  the  course 
of  the  executive  head  of  the  government,  the  Houses 
of  Assembly  were  under  a  further  disadvantage  in 
that  the  upper  branch  of  the  legislature  did  not  work 
in  harmony  with  them.  Thus,  in  1819,  the  House  of 
Lower  Canada  carefully  went  over  the  whole  civil 
list  of  the  Province  and  passed  a  supply  bill  in  which 
the  salary  of  every  person  in  the  employment  of  the 
government  was  specifically  set  forth.  This  meas- 
ure was  promptly  rejected  by  the  Legislative  Council 
on  the  ground  that  it  improperly  assumed  the  right 
of  ParHament  to  prescribe  to  the  Crown  the  number 
and  classification  of  its  servants  and  would  make 
their  retention  in  office  dependent  on  the  whims  of 
an  elective  body  instead  of  during  His  Majesty's 
pleasure.  Nor  was  there  any  way  in  which  the 
political  complexion  of  the  Upper  House  could  be 
changed.  The  designation  of  the  members  of  the 
Legislative  Councils  lay  entirely  in  the  hands  of  the 
Governor  General,  and,  when  the  conflict  with  the 
Houses  of  Assembly  became  acute,  he  took  pains  to 
see  that  only  staunch  upholders  of  the  royalist  point 
of  view  were  appointed  to  the  Upper  Chamber. 

Under  these  circumstances,  it  was  difficult  for  the 

^5 


THE  CANADIAN  BUDGETARY  SYSTEM 

popular  branch  of  the  legislature  to  make  headway 
in  its  struggle  for  control  of  the  Crown  revenues. 
As  the  principle  that  the  executive  and  legislative 
branches  of  the  government  should  be  in  accord  had 
not  been  embodied  in  the  legislation  affecting  the  two 
Canadas,  the  governing  coterie  was  entirely  inde- 
pendent of  the  Houses  of  Assembly  and  under  no 
necessity  of  heeding  their  wishes.  Moreover,  these 
bodies  in  their  earlier  days  had  passd  certain  perma- 
nent revenue  acts,  which  could  not  be  amended  so  as 
to  give  the  Assembly  annual  control  unless  the  Legis- 
lative Council  gave  its  assent  thereto.  As  the  pur- 
pose of  such  amendments  was  only  too  well  known, 
the  upper  branches  of  the  legislature  steadily  de- 
clined to  give  this  requisite  consent.  With  both  the 
Crown  and  the  permanent  sources  of  revenue  voted 
by  the  local  Parliaments  more  or  less  at  its  com- 
mand, the  executive  government  found  it  possible  to 
carry  on  its  functions  even  when  the  Houses  of  As- 
sembly refused  to  vote  certain  needful  supplies  by 
simply  obtaining  assistance  from  the  Imperial 
Exchequer.  For  example,  the  Governor  General  ad- 
vanced in  both  1822  and  1823  £30,000  from  the  military 
funds  at  his  disposal  towards  the  expenses  of  the  gov- 
ernment of  Lower  Canada.  The  House  of  Assembly 
regarded  his  course  of  action  as  unwarranted  and  re- 
jected the  claim  put  in  for  the  reimbursement  of  this 
amount. 

As  no  coordination  existed  between  various  branches 
of  the  government  the  executive  authorities  and  the 
legislature  frequently  became  deadlocked  over  the  ques- 
tion of  supplies.  The  leaders  of  the  popular  party  were 
regarded  as  undesirable  because  they  had  opposed  grant- 

26 


GOVERNMENT  EXPENDITURES 

ing  the  demands  of  the  government  in  full  and  were 
regularly  excluded  from  office.  On  the  other  hand, 
their  most  uncompromising  opponents  were  appointed 
to  all  the  high  official  positions.  This  unfair  treatment 
caused  great  resentment  and  party  passion  ran  high  in 
consequence.  In  view  of  the  dangerous  political  dis- 
sensions prevailing  in  the  Provinces,  it  was  patent  to  all 
observers  that  some  remedy  for  the  existing  unsatisfac- 
tory state  of  affairs  would  have  to  be  found. 

Introduction  of  Responsible  Government:  1831- 
1841.  As  a  first  step  towards  allaying  the  growing 
unrest  and  the  constantly  increasing  friction  between 
the  executive  and  legislative  branches  of  the  provincial 
governments,  the  British  Parliament  passed  an  act  in 
1 83 1  permitting  the  legislatures  of  the  two  Canadas  to 
devote  the  proceeds  of  the  duties  levied  under  imperial 
statutes  towards  the  expenses  of  the  local  governments. 
This  left  only  the  relatively  insignificant  territorial  or 
casual  revenues  still  subject  to  the  disposition  of  the 
Crown.  While  this  surrender  of  the  main  sources  of 
Crown  revenues  appeased  the  legislature  of  Upper 
Canada  and  led  to  the  making  of  a  permanent  provision 
for  the  civil  list  and  the  salaries  of  the  judiciary,  the 
Assembly  of  Lower  Canada  still  remained  dissatisfied. 
Determined  to  gain  control  of  the  Crown's  casual 
revenues  also,  and  to  force  the  governing  branch  to  obey 
its  wishes,  the  Lower  Canadian  House  actually  refused 
for  four  years  to  make  any  proper  provision  for  the 
carrying  on  of  the  public  service.  So  acute  did  party 
feeling  become  over  the  continued  failure  to  redress  the 
grievances  of  the  people  and  to  allow  them  a  proper 
voice  in  the  government  that  open  rebellions  against 
British  authority  occurred  almost  independently  of  each 

27 


THE  CANADIAN  BUDGETARY  SYSTEM 

other  in  the  two  Canadas  in  1837.  Although  quickly 
suppressed,  they  had  as  a  consequence  the  suspension 
of  the  constitution  of  Lower  Canada  and  the  sending 
of  Lord  Durham  by  the  British  Ministry  to  report  on 
the  best  method  of  allaying  the  prevailing  popular  dis- 
content. 

Lord  Durham's  Report.  After  a  long  and  careful 
investigation  into  Canadian  affairs,  Lord  Durham  sub- 
mitted in  January,  1839,  an  elaborate  report  to  the 
Queen  in  which  he  made  various  suggestions  for 
remedying  the  political  and  social  ills  besetting  the  two 
Canadas.  In  order  to  render  certain  the  ultimate  pre- 
dominance of  the  English  element  of  the  population,  he 
advised  that  the  two  Provinces  be  reunited  and  also 
urged  that  "harmony  in  place  of  dissension  between  the 
various  powers  of  the  State''  should  be  secured  by  intro- 
ducing the  British  system  of  responsible  government. 
This  last  desideratum  was  to  be  accomplished  by  con- 
fining within  much  narrower  limits  the  interference  of 
the  imperial  authorities  in  the  details  of  colonial  affairs, 
and  by  issuing  instructions  to  the  colonial  governors  to 
intrust  the  administration  of  public  affairs  to  such  men 
only  as  could  command  the  support  of  a  majority  of  the 
members  of  the  Houses  of  Assembly. 

In  the  course  of  his  report,  Lord  Durham  also  recom- 
mended that  the  right  to  introduce  bills  calling  for  the 
expenditure  of  public  money  be  taken  away  from  the 
individual  members  of  the  Assembly.  The  reasons  for 
this  most  important  proposed  change  can  best  be  given 
by  quoting  his  own  language : 

It  is  necessary  that  I  should  also  recommend  what 
appears  to  me  an  essential  limitation ,  on  the  present 
powers  of  the  representative  bodies  in  these  colonies.    I 

28 


GOVERNMENT  EXPENDITURES 

consider  good  government  not  to  be  attainable  while  the 
present  unrestricted  powers  of  voting  public  money  and 
of  managing  the  local  expenditure  of  the  community  are 
lodged  in  the  hands  of  an  Assembly.  As  long  as  revenue 
is  raised,  which  leaves  a  large  surplus  after  the  payment 
of  the  necessary  expenses  of  the  civil  government,  and 
as  long  as  any  member  of  the  Assembly  may,  without 
restriction,  propose  a  vote  of  public  money,  so  long  will 
the  Assembly  retain  in  its  hands  the  powers  which  it 
everywhere  abuses,  of  misapplying  that  money.  .  .  . 
If  the  rule  of  the  Imperial  Parliament,  that  no  money 
vote  should  be  proposed  without  the  previous  consent 
of  the  Crown  were  introduced  into  these  colonies,  it 
ntight  be  wisely  employed  in  protecting  the  public  inter- 
ests, now  frequently  sacrificed  in  that  scramble  for  local 
appropriations,  which  chiefly  serves  to  give  an  undue 
influence  to  particular  individuals  or  parties.' 

The  same  slipshod  methods  regarding  the  appropria- 
tion of  public  moneys  prevailed,  in  fact,  in  all  the  British 
North  American  colonies.  Speaking  of  former  condi- 
tions in  the  Province  of  New  Brunswick,  a  writer  of 
considerable  prominence  observes  as  follows : 

The  business  of  the  legislature  was  conducted  with  a 
loose  hand.  There  was  no  restriction  by  the  Govern- 
ment upon  the  expenditures;  but  every  member  had 
access  to  the  public  chest,  in  his  own  way,  for  the  benefit 
of  his  constituents,  without  regard  to  system,  calculation 
or  economy.  The  Budget  was  formed  not  as  now  by 
the  Provincial  Secretary,  with  the  whole  Government 
answerable  for  it;  but  in  a  haphazard  way,  every  mem- 
ber, no  matter  how  outre  his  ideas  of  trade,  having  an 
equal  voice  in  its  preparation.  There  was  no  Board  of 
Works  at  this  time.  The  public  moneys  were  expended 
on  roads,  bridges,  etc.,  in  accordance  with  the  wants  or 
wishes  of  the  inhabitants  of  particular  districts,  afford- 

1  Lord  Durham's  Report,  British  Parliamentary  Edition,  p.  117. 

29 


THE  CANADIAN  BUDGETARY  SYSTEM 

ing  large  jobs  sometimes  to  favorites  and  active  sup- 
porters of  candidates  for  the  Assembly.  The  most  influ- 
ential members,  whether  in  the  House  or  with  their 
constituents,  generally  managed  to  get  the  lion's  share 
in  the  supply  distribution.  It  was  not  then,  as  now, 
contrary  to  law  for  a  member  to  hold  a  plurality  of 
offices  under  the  government.  ...  In  some  instances 
half  a  dozen  offices  were  held  by  one  member;  such 
members  furnished  a  strong  body-guard  to  support  their 
employers,  and  to  aid  in  perpetuating  a  system  so  favor- 
able to  the  money-spenders  and  oppressive  to  the  tax- 
payers; hence  the  storms  and  differences  that  arose  on 
every  effort  being  made  in  the  Assembly  to  reform  the 
system  under  which  these  and  cognate  abuses  existed. 
The  surrender  of  'The  Initiation  of  the  Money  Grants*' 
(as  recommended  by  Sir  Wm.  Colebrook)  was  stoutly 
resisted  by  the  House,  as  an  encroachment  upon  the 
liberties  of  the  people.  Honorable  members  knew  too 
well  the  value  of  ^'holding  the  purse  strings"  in  their 
own  hands,  and  how  their  interests  were  best  subserved, 
to  surrender  without  a  struggle  privileges  which  gave 
them  such  an  immense  advantage." 

Again,  in  regard  to  the  want  of  system  in  preparing 
the  government  estimates,  he  says:^ 

There  seemed  to  be  a  great  deal  of  groping  in  the 
dark.  The  Initiation  of  the  Money  Votes  resting  with 
the  House,  there  was  no  estimate  made  by  anyone  for 
the  respective  public  services  for  which  moneys  were 
required.  There  was  no  individual  responsibility  in  the 
matter.  Members  w^ere  like  vessels  at  sea  without  rudder 
or  compass — subject  to  the  fluctuations  of  the  winds — 
sums  were  proposed  by  any  member  and  carried,  for  all 
sorts  of  purposes,  without  due  consideration  as  to 
whether  the  treasury  contained  money  enough  upon  call 

1  G.  Fenety,  Political  Notes  and  Observations,  Fredericton,  1867, 
p.  30. 

2  Ibid.  p.  203. 

30 


THE  CANADIAN  BUDGETARY  SYSTEM 

to  satisfy  the  demands.  There  could  have  been  no  better 
system  in  the  world  for  running  the  Province  into  bank- 
ruptcy. If  commerce  is  beset  by  a  calm  and  stagnates, 
and  the  revenues  are  prosperous,  it  is  an  inducement  to 
over-burden  the  supply  book  with  new  amounts,  based 
upon  frivolous  pretexts.  When  money  is  plentiful,  favor- 
ites are  not  forgotten.  Thus  from  year  to  year  we  were 
brought  closer  to  the  verge  of  the  precipice,  so  that  when- 
ever a  commercial  panic  ensued,  which  was  periodically 
so  common  to  the  trade  of  this  Province,  we  were  with- 
out money  and  without  credit. 

How  this  lack  of  responsibility  on  anyone's  part  in  the 
preparation  of  the  annual  budget  disastrously  affected 
the  financial  equilibrium  of  the  Province  is  well  illus- 
trated in  the  following  extracts  from  a  speech  delivered 
in  1842  by  Hon.  Charles  Simonds,  the  head  for  the  time 
being  of  the  New  Brunswick  Government : 

Five  years  ago  he  found  the  Province  in  a  highly 
flourishing  condition — the  treasury  full  and  business  of 
all  kinds  in  successful  operation.  The  Province  now  is 
entire  prostrate — deeply  in  debt  and  no  means  at  com- 
mand to  extricate  it  out  of  its  difficulties.  The  revenue 
during  the  last  five  years  affords  an  aggregate  of 
£467,000;  and  the  debt  was  now  £133,000.  The  wants 
of  Government  to  carry  on  its  operations,  independent 
of  sums  for  roads  and  bridges,  were  £68,000  (per 
annum).  It  would  then  be  seen  what  immense  sums 
of  money  had  been  squandered,  after  the  necessary 
expenses  of  Government  had  been  paid.  It  was  not  the 
fault  of  one  individual,  or  of  any  number  of  individuals, 
but  the  fault  of  the  abominable  system  that  favored  so 
much  prodigality.  This  was  the  system  throughout: 
help  me  and  I'll  help  you.  There  was  no  check  whatever 
in  the  expenditure  of  the  public  moneys.  The  very  same 
system  was  observed  in  England  previous  to  1706,  and 
precisely  the  same  consequences  flowed  from  it.     The 

31 


GOVERNMENT  EXPENDITURES 

people  bestirred  themselves  in  the  matter  and  succeeded 
in  overturning  it/ 

When  the  English  Ministry  decided  to  adopt  Lord 
Durham's  recommendations  and  sent  out  the  future 
Lord  Sydenham  to  carry  them  into  effect,  the  new  Gov- 
ernor General  found  a  similar  condition  of  financial 
chaos  existing  in  the  two  Canadas.  *The  finances,"  he 
wrote,  ''are  more  deranged  than  we  believed  even  in 
England.  The  deficit,  £75,000  a  year,  more  than  equals 
the  income."  Concerning  the  conduct  of  parliamentary 
business,  he  unbosomed  himself  as  follows : 

You  can  form  no  idea  of  the  manner  in  which  a  Colo- 
nial Parliament  transacts  its  business.  I  got  them  into 
comparative  order  and  decency  by  having  measures 
brought  forward  by  the  Government.  But  when  they 
came  to  their  own  affairs,  and,  above  all,  to  the  money 
matters,  there  was  a  scene  of  confusion  and  riot  of 
which  no  one  in  England  can  have  any  idea.  Every  man 
proposes  a  vote  for  his  own  job,  and  bills  are  introduced 
without  notice  and  carried  through  all  their  stages  in  a 
quarter  of  an  hour.  One  of  the  greatest  advantages  of 
the  union  will  be  that  it  will  be  possible  to  introduce  a 
new  system  of  legislating,  and,  above  all,  a  restriction 
upon  the  initiation  of  money  votes.  .  .  .  The  change 
will  be  decidedly  popular,  for  the  members  all  complain 
that,  under  the  present  system,  they  cannot  refuse  to 
move  a  job  for  any  constituent  who  desires  it.* 

Initiative  in  Voting  Public  Money  Confined  to 
Executive.  In  accordance  with  Lord  Durham's 
recommendation,  the  British  Parliament  on  July  3d, 
1840,  passed  an  act  reuniting  Upper  and  Lower  Canada 
*^to  form  one  Province  for  the  purpose  of  executive  gov- 
ernment and  legislation.''     This  statute  provided  for  a 

1  Quoted  in  Fenety,  Notes  and  Observations,  p.  38> 

2  Scrope,  Memoir  of  Lord  Sydenham,  London,  1844,  p.  165. 

32 


THE  CANADIAN  BUDGETARY  SYSTEM 

Provincial  Parliament,  consisting  of  a  legislative  coun- 
cil— whose  members  were  appointed  by  the  Crown  for 
life — and  an  elected  Assembly  in  which  the  Provinces 
Avere  allowed  an  equal  number  of  representatives.  A 
consolidated  revenue  fund  was  established  and  all  ap- 
propriation bills  were  required  to  originate  in  the  Legis- 
lative Assembly,  which  was  forbidden  to  pass  any  vote, 
resolution  or  bill  involving  the  expenditure  of  public 
money  unless  the  same  had  been  first  recommended  to 
it  by  a  written  message  of  the  Governor  General. 

Because  the  new  measure  prescribed  that  only  the 
English  language  should  be  used  in  Parliament,  and 
allotted  Lower  Canada  wdth  its  half  as  large  again  a 
population  only  the  same  membership  in  the  Legislative 
Assembly  as  Upper  Canada,  the  French  Canadians  were 
violently  opposed  to  its  adoption.  Their  resistance 
proved  futile,  however,  and  on  February  lO,  1841,  the 
union  of  the  two  Provinces  was  officially  proclaimed. 
The  change  to  a  responsible  ministry  form  of  govern- 
ment and  the  taking  away  from  individual  members  of 
the  popular  branch  of  the  legislature  of  the  right  to 
initiate  the  expenditure  of  public  funds  having  thus  been 
carried  out  in  due  course  in  the  new  Province  of  United 
Canada,  the  other  British  North  American  colonies 
were  not  long  in  following  suit.  By  1852,  all  had 
adopted  the  new  system  which  Lord  Durham  had  so 
warmly  advocated  as  essential  for  the  attainment  of 
good  government  in  England's  colonial  dependencies. 

Parliament  Attains  Complete  Control  of  Govern- 
ment Receipts  and  Expenditures:  1841-1867.  Ac- 
cording to  the  terms  of  the  Union  Act  of  1840,  which 
established  the  new  Province  of  United  Canada,  the 

33 


GOVERNMENT  EXPENDITURES 

British  Crown  surrendered  control  of  the  hereditary  or 
casual  revenues.  Just  as  in  the  case  of  the  amounts  de- 
rived from  the  duties  on  foreign  spirits  imposed  by  the 
Imperial  Parliament,  the  proceeds  of  the  territorial 
revenues  of  Canada  were  paid  henceforth  into  the  treas- 
ury of  the  Province  to  be  disposed  of  as  its  legislature 
might  direct.  The  British  Parliament  still  expressly 
reserved  to  itself,  however,  the  right  to  levy  dues  and 
otherwise  to  regulate  the  trade  and  commerce  of  the 
colony.  The  last  Canadian  tariff  imposed  by  England 
took  effect  on  September  8,  1842,  and  it  was  not  until 
four  years  later  that  all  the  British  colonies  in  North 
America  were  authorized  to  reduce  or  alter  the  duties 
on  foreign  goods.  In  1849,  the  imperial  government 
repealed  the  restrictive  navigation  laws  and,  for  the  first 
time,  allowed  the  St.  Lawrence  River  to  be  visited  by 
vessels  of  all  nations.  From  this  time  on,  the  Legisla- 
tive Assembly  of  Canada  exercised  entire  control  over 
government  receipts  and  expenditures,  and  the  English 
principle — that  the  elected  House  should  impose  all  the 
taxes  and  vote  the  supplies — came  at  last  into  full  eft'ect. 

Events  Leading  to  Confederation.  As  mentioned 
above,  Upper  and  Lower  Canada  were  united  into  one 
Province  by  the  imperial  statesman  in  the  expectation 
that  the  British  element  in  the  population  would  gain 
the  ascendency  over  the  French  Canadians.  At  the  time 
this  union  took  place.  Upper  Canada  had  incurred  the 
large  debt  of  $6,000,000,  mainly  for  internal  improve- 
ments. On  the  other  hand,  Lower  Canada  was  free 
from  indebtedness  and  had  a  surplus  of  $300,000. 
When  it  came  to  the  question  of  revenue,  a  similar  in- 
equality soon  manifested  itself.     For  every  $70  paid  by 

34 


THE  CANADIAN  BUDGETARY  SYSTEM 

Upper  Canada  into  the  common  treasury,  Lower  Canada 
contributed  but  $30. 

Since  the  two  subdivisions  were  equally  represented 
in  the  new  Legislative  Assembly,  the  members  from 
Lower  Canada — who  represented  the  French  Canadian 
elements — speedily  secured  the  reins  of  power.  By 
their  unity  of  action,  they  were  not  long  in  obtaining  a 
complete  dominancy  over  public  affairs  and  were  able  to 
secure  the  repeal  in  1848  of  the  clause  prohibiting  the 
use  of  the  French  language  in  parliamentary  debates. 
This  ascendency  they  naturally  used  to  further  the  in- 
terests of  their  own  section  as  much  as  possible  and 
spent  the  government  funds  lavishly  among  their  own 
constituencies. 

Although  Upper  Canada  contributed  more  than  two- 
thirds  of  the  total  receipts,  only  about  one-quarter  of 
the  government's  revenues  were  expended  for  its  benefit. 
Aside  from  resenting  this  unfair  discrimination,  the 
people  of  this  part  of  the  Province  were  gravely  dis- 
quieted by  the  growing  public  debt  and  the  waste  and 
extravagance  of  a  government,  which  they  seemed 
powerless  to  overthrow.  When  the  plan,  therefore,  of 
a  confederation  of  all  the  British  North  American 
colonies  was  earnestly  broached  in  1862,  it  met  with  an 
especially  warm  reception  in  Upper  Canada.  Irre- 
spective of  its  other  advantages,  it  was  welcomed  as  a 
means  of  escape  from  the,  to  this  region,  unprofitable 
and  unpopular  union  with  the  rest  of  Canada. 

Previous  to  the  formation  of  the  Dominion,  both  the 
United  Canadas  and  the  so-called  Maritime  Provinces — 
namely.  Nova  Scotia,  New  Brunswick  and  Prince  Ed- 
ward Island — had  derived  the  major  part  of  their 
provincial  revenues  from  customs  duties.     Indeed,  fully 

35 


GOVERNMENT  EXPENDITURES 

four-fifths  of  the  receipts  of  the  Province  of  Canada  be- 
tween 1 841 -1 867  were  obtained  from  this  source.  As 
the  new  confederation  was  to  have  the  sole  right  of  levy- 
ing custom  and  excise  duties  thereafter,  its  sponsors 
speedily  realized  that  the  project  for  a  Dominion  gov- 
ernment could  not  be  carried  into  effect  unless  the  pros- 
pective loss  of  their  customs  revenues  could  be  made 
good  to  the  Provinces  in  some  fashion  or  other.  Since 
the  Canadian  people  have  exhibited  a  not  surprising 
aversion  to  direct  taxation,  a  resort  on  the  part  of  the 
Provinces  to  this  method  of  raising  funds  for  govern- 
ment purposes  was  not  to  be  thought  of.  Hence,  if  the 
plan  of  confederation  was  not  to  suffer  shipwreck,  some 
way  had  to  be  devised  for  overcoming  this  difficulty. 

Federal  Assumption   of   Provincial   Debts.     The 

scheme  ultimately  worked  out  and  adopted  was  as  fol- 
lows: On  its  formation,  the  new  Dominion  government 
was  to  take  possession  of  and  maintain  certain  property 
and  public  works  belonging  to  the  various  Provinces 
whenever  they  formally  entered  the  Union.  Title  to  all 
provincial  railways,  canals,  light-houses,  post  offices,  cus- 
tom houses,  armories,  etc.,  was  to  pass  at  once  to  the 
Dominion.  But,  inasmuch  as  the  Provinces  had  in- 
curred more  or  less  heavy  debts  in  acquiring  the  property 
and  in  completing  the  public  works  to  be  thus  trans- 
ferred, it  was  felt  that  the  central  government  should,  in 
all  fairness,  assume  the  provincial  indebtedness  so  in- 
curred. Accordingly,  it  was  agreed  that  the  Dominion 
government  should  shoulder  the  debts  of  the  various 
Provinces  with  this  proviso,  however,  that  no  Province 
was  to  be  allowed  to  throw  on  the  Dominion  an  indebted- 
ness in  excess  of  $25  per  head  of  its  "  population  as 

36 


GOVERNMENT  EXPENDITURES 

ascertained  by  the  last  official  census.  Should  the  finally 
established  debt  of  any  Province  exceed  $25  a  head,  it 
was  to  pay  interest  at  the  rate  of  five  per  cent  per  annum 
on  this  excess  amount  to  the  Dominion  treasury.  But, 
in  case  the  debt  proved  to  be  less  than  $25  a  head,  the 
Province  was  to  receive  interest — also  at  the  rate  of  five 
per  cent — from  the  Dominion  treasury  on  the  difference 
between  its  actual  debt  and  the  fictitious  indebtedness 
which  it  was  entitled  to  charge  up  against  the  Dominion. 
By  subsequent  legislation  passed  in  1873  ^^^  1884,  the 
per  capita  allowance  to  the  Provinces  for  debt  reckon- 
ing purposes  was  raised  from  $25  to  $32.43. 

Subsidies  to  the  Provinces.  As  stated  before,  the 
Provinces  were  unwilling  to  accept  confederation  if  it 
meant  that  they  would  have  to  impose  direct  taxes. 
When  they  agreed,  therefore,  to  surrender  to  the  pro- 
posed central  government  the  exclusive  right  to  levy  cus- 
tom and  excise  duties  they  made  it  a  condition  precedent 
that  a  certain  portion  of  the  revenue  to  be  thus  collected 
should  be  returned  to  them  and  in  amount  sufficiently 
large  to  enable  them  to  carry  on  their  provincial  affairs 
without  having  recourse  to  direct  taxation.  Hence,  the 
British  North  America  Act  not  only  relieved  the 
Provinces  of  their  obligations  in  the  manner  just  de- 
scribed, but  also  bound  the  Dominion  government  to 
''make  an  annual  grant  in  aid  of  each  Province,  pay- 
able half-yearly  in  advance."  This  grant  or  subsidy  was 
made  to  consist  of  two  parts.  There  was  to  be,  first,  a 
fixed  sum  for  each  Province  for  the  support  of  their 
legislatures;  and  second,  there  was  to  be  a  per  capita 
grant.  The  two  together  were  to  constitute  the  provin- 
cial subsidy,  which,  in  amount,  it  was  estimated,  would 

37 


THE  CANADIAN  BUDGETARY  SYSTEM 

be  needed  for  the  maintenance  of  the  provincial  govern- 
ment. 

The  four  original  Provinces,  New  Brunswick,  Nova 
Scotia,  Quebec  and  Ontario,  were  allowed  $50,000, 
$60,000,  $70,000  and  $80,000,  respectively  by  the  Domin- 
ion towards  the  expenses  of  their  legislatures.  The  per 
capita  subsidy  was  made  ''equal  to  eighty  cents  per  head 
of  the  population,  as  ascertained  by  the  census  of  1861, 
and,  in  the  case  of  Nova  Scotia  and  New  Brunswick,  by 
each  subsequent  decennial  census  until  the  population  of 
each  of  these  two  Provinces  amounts  to  400,000  souls, 
at  which  rate  such  grant  shall  thereafter  remain.''  Ap- 
parently it  was  thought  that  the  sum  of  eighty  cents  per 
head  would  yield  a  sufficient  amount  to  cover  the  wants 
of  the  Provinces  and  it  was  doubtless  for  that  reason 
that  this  figure  was  agreed  upon. 

It  was  conceded  by  the  advocates  of  confederation  that 
the  wiser  plan  would  have  been  not  to  consent  to  the 
plan  of  federal  subsidies  for  the  various  Provinces,  but 
to  compel  the  local  governments  to  provide  for  all  local 
outlays  and  to  meet  their  expenditures  by  adopting  a 
system  of  direct  taxation.  They  correctly  foresaw  that 
''when  you  have  a  spending  power  that  is  not  under 
an  obligation  to  find  the  means  it  spends,  you  have  a 
spending  power  that  is  more  likely  to  tend  to  extrava- 
gance than  to  economy."^  Nevertheless,  in  order  to 
bring  about  the  much  desired  union,  they  very  reluc- 
tantly had  to  concede  the  bestowal  annually  upon  the 
Provinces  of  Dominion  government  subsidies  to  an 
aggregate  amount  of  $2,630,000.  But  they  tried  to 
prevent  any  further  spread  of  the  subsidy  evil  by  pro- 
viding that  the  subsidies  originally  granted  could  not  be 

1  Hon.  Mr.  Foster — Can.  Hansard,  1906-07,  p.  5317. 

38 


GOVERNMENT  EXPENDITURES 

increased  beyond  the  amounts  specified  in  the  Act  of 
Confederation  itself.  It  was  anticipated  that,  as  their 
population  grew,  the  Provinces  would  be  compelled  to 
introduce  a  system  of  direct  taxation  in  order  to  eke  out 
the  meagerness  of  their  revenue.  Contrary  to  what  the 
founders  of  the  Dominion  desired  or  expected,  however, 
the  Provinces  are  still  fighting  shy  of  direct  taxation  and 
the  Act  of  Confederation,  as  will  be  explained  hereafter, 
was  amended  in  1907  so  as  to  provide  for  the  grant  of 
greatly  increased  provincial  subsidies. 

Subsidies  to  the  Newer  Provinces.  Since  the  con- 
federation of  the  four  original  Provinces  in  1867, 
Manitoba,  British  Columbia,  Prince  Edward  Island, 
Saskatchewan,  and  Alberta  have  become  component 
parts  of  the  Dominion  in  the  order  named.  When,  in 
1870,  Manitoba  applied  for  admission,  the  question 
arose  whether  the  new  territories  were  to  derive  from 
the  provincial  subsidy  and  the  assumption  of  debt  pro- 
visions of  the  Dominion  constitution  benefits  similar  to 
those  enjoyed  by  the  original  Provinces.  The  view 
finally  prevailed  that  all  future  applicants  for  admission 
should  be  treated  on  the  same  basis  as  the  Provinces  first 
entering  the  confederation.  Inasmuch  as  these  original 
Provinces  had  been  relieved  under  the  terms  of  the 
British  North  America  Act  of  all  their  indebtedness 
incurred  for  local  improvements,  they  in  eflfect  had 
secured  all  the  advantages  of  these  improvements  with- 
out cost  to  themselves.  It  was  seen,  therefore,  that  it 
would  be  unfair  if  the  newer  Provinces  were  not 
similarly  assisted  by  the  Dominion  and  enabled  to  ac- 
quire public  buildings  and  local  improvements  free  of 
cost.     When  Manitoba  entered  the  Union,  therefore, 

39 


THE  CANADIAN  BUDGETARY  SYSTEM 

she  was  allowed  a  grant  for  the  expense  of  her  legisla- 
ture as  well  as  the  eighty  cents  per  head  subsidy  and 
was  also  credited  by  the  Dominion  government  with  a 
certain  assumed  indebtedness,  based  on  its  estimated 
population,  on  which  interest  was  allowed  at  the  rate 
of  five  per  cent  yearly.  The  same  treatment  was  ac- 
corded to  the  other  Provinces,  which  thereafter  became 
members  of  the  confederation. 

Changes  in  Debt  Assumption  Provisions.  When 
the  scheme  of  provincial  debt  allowances  was  originally 
formulated,  the  intention  was  that  the  sums  placed  to  the 
credit  of  the  different  Provinces  under  the  head  of  debt 
account  should  remain  intact  and  that  only  the  interest 
due  on  these  amounts  should  be  paid  over  to  the 
Provinces.  With  only  this  interest  money  at  their  dis- 
posal, however,  the  Provinces  speedily  found  that  they 
could  carry  out  but  little  in  the  way  of  public  improve- 
ments. Accordingly,  they  caused  the  Dominion  Par- 
liament to  pass  an  act  in  1874,'  which  permits  the  Gov- 
ernor General,  with  the  advice  of  his  councilors  to  ad- 
vance at  his  discretion  to  any  Province  such  sums  as 
may  be  necessary  for  local  improvements,  provided, 
however,  that  the  sums  so  advanced  do  not  in  the 
aggregate  amount  to  more  than  the  difference  between 
the  assumed  indebtedness  credited  to  the  Province  when 
it  entered  the  Union,  and  its  actual  debt  for  which  the 
Dominion  has  made  itself  responsible.  Within  the 
limits  thus  specified,  the  statute  sanctions,  therefore,  the 
withdrawal  of  the  moneys  to  the  credit  of  the  Provinces 
with  the  Dominion  for  the  purpose  of  assisting  in  the 
construction    of    provincial    public    works.      In    1885, 

1  Since  confederation,  the  Federal  provincial  subsidies  have  been 
revised  more  than  twenty  times. 

40 


GOVERNMENT  EXPENDITURES 

another  section  was  added  requiring  the  provincial  legis- 
latures to  join  in  the  application  to  the  Governor  Gen- 
eral for  the  withdrawal  of  such  moneys  instead  of 
leaving  the  making  of  the  request  entirely  in  the  hands 
of  the  provincial  governments  as  theretofore. 

While  the  Provinces  as  a  result  of  this  legislation 
acquired  a  species  of  reserve  fund,  which  could  be 
drawn  upon  in  times  of  emergency  to  meet  the  cost  of 
new  public  improvements,  none  of  the  funds  thus  placed 
at  their  disposal  could  be  used  in  defraying  the  everyday 
expenditures  of  the  provincial  governments.  As  the 
expenses  of  these  governments  were  constantly  mount- 
ing on  account  of  the  growth  of  population  and,  as  it 
became  increasingly  difficult  for  them  to  make  both  ends 
meet  without  resorting  to  direct  taxation,  a  movement 
began  in  1887  to  secure  an  increase  in  the  direct  sub- 
sidies granted  to  the  various  Provinces  by  the  Dominion. 
At  the  same  time,  the  marked  rise  in  the  revenues  of 
the  central  government  served  to  stimulate  this  agitation. 

Whereas,  at  confederation,  one-fifth  of  the  Domin- 
ion's total  receipts  had  been  distributed  as  subsidies 
among  the  provincial  governments,  this  proportion  had 
dwindled  to  less  than  one-ninth  by  1884.  Enjoying  as  it 
did  superabundant  revenues,  a  general  feeling  prevailed 
that  the  central  government  ought  to  contribute  more 
towards  lightening  the  financial  burdens  of  the  Prov- 
inces. Since  all  the  local  governments  profited  under 
the  provincial  subsidy  arrangement  and  all  alike  were 
interested  in  having  its  benefits  extended,  no  effective 
opposition  was  to  be  expected  to  the  proposition  to  have 
the  provincial  subsidies  increased.  The  difficulties  of 
amending  the  British  North  America  Act,  however,  pre- 
vented any  change  from  being  effected  until  1907.     In 

41 


THE  CANADIAN  BUDGETARY  SYSTEM 

that  year,  the  direct  grants  to  the  Provinces  for  the  sup- 
port of  their  legislatures  were  considerably  increased 
and  the  amount  of  the  same  made  to  vary  in  accordance 
with  the  size  of  the  population.  At  the  same  time,  the 
per  capita  subsidy  to  each  Province  was  fixed  at  eighty 
cents  a  head  until  the  total  population  should  reach  two 
and  one-half  millions  and  at  sixty  cents  a  head  upon 
each  soul  in  excess  of  this  number. 

These  changes  in  the  original  subsidy  provisions  of 
the  British  North  America  Act  have  been  explained  and 
defended  as  follows : 

I  have  never  been  able  to  see  why  in  the  case  of  the 
smaller  Provinces  it  should  be  determined  that  we, 
recognizing  the  principle  of  payment  by  population, 
should  say:  "We  will  give  you  a  share  of  the  Dominion 
revenues,  but  the  moment  your  population  reaches 
400,000  the  subsidy  beyond  that  must  stop,  and  you  will 
get  no  increase/'  Now,  every  soul  added  to  the  popu- 
lation of  a  province  after  the  400,000  limit,  adds  to  the 
burden  of  local  Government.  You  need  more  roads,  you 
need  more  schools.  Every  one  of  the  items  which  enter 
into  the  outlay  of  provincial  governments  is  increasing 
with  the  increased  population  of  the  Province.  Why, 
under  such  conditions  there  should  be  such  a  limit  stipu- 
lated, I  have  never  been  able  to  understand.  I  think  the 
proposal,  which  is  involved  in  this  resolution,  of  a  sub- 
sidy per  head  of  the  population,  to  continue  and  increase 
as  the  population  increases  is  a  sound  one.  .  .  .  It  is 
a  reasonable  proposition  that  one  Province  with  a  popu- 
lation of  a  couple  of  millions  will  not  need  at  every  point 
as  much  per  capita  as  another  Province  with  a  small 
population.  Just  as  the  proportionate  cost  of  any  busi- 
ness is  reduced  as  the  business  expands,  so  the  great 
Province  of  Ontario  could  get  along  with  a  less  sum  per 
head  for  certain  purposes  than  British  Columbia  or 
Nova  Scotia  or  any  of  the  smaller  Provinces.    I  am  sure 

42 


THE  CANADIAN  BUDGETARY  SYSTEM 

that  that  idea  must  have  been  present  to  the  minds  of 
the  fathers  of  Confederation/ 

On  the  other  hand,  it  was  said  in  opposition  that — 
the  Government  ought  to  have  made  a  full  examination 
not  only  into  the  expenditures  of  the  Provinces  for  a 
series  of  years,  but  also  into  their  sources  of  revenue ;  and 
before  immense  sums  were  voted  out  of  the  Dominion 
treasury,  the  Government  should  have  carefully  pointed 
out  to  the  different  Provinces  both  those  expenditures 
which  might  have  been  deemed  extravagant,  and  the 
need  of  utilizing  all  the  resources  in  the  great  franchises 
of  the  Provinces  as  available  means  for  replenishing 
their  treasuries/ 

Whether  the  readjustment  of  the  Dominion  subsidies 
effected  in  1907  will  permanently  satisfy  the  Provinces 
is  an  open  question.  In  the  last  few  years,  the  revenues 
of  the  Dominion  government  have  been  growing  by 
leaps  and  bounds  and  large  surpluses  of  receipts  over 
ordinary  government  expenditures  have  been  the  rule. 
This  state  of  affairs  has  aroused  the  cupidity  of  the 
Provinces,  and  the  idea  has  been  frequently  mooted  of 
late  that  the  provincial  subsidies  should  again  be 
periodically  revised  upwards.  It  is  true  that  the  re- 
adjustment of  1907  was  termed  unalterable,  but  no  in- 
superable difficulties  exist  which  would  prevent  the  up- 
setting of  this  so-called  final  settlement. 

Any  legislation  of  the  Parliament  of  Canada,  whether 
we  use  the  word  **final"  or  not,  of  course,  we  can  from 
time  to  time  amend.  But  by  these  resolutions  it  is  pro- 
posed that  an  Imperial  Act  shall  be  passed  providing 
that,  for  the  purposes  mentioned  in  section  118  of  the 
British  North  America  Act,  which  deals  with  the  sub- 
sidies to  the  provincial  governments  and  legislatures,  the 

1  Hon.  W.  S.  Fielding — Can.  Hansard,  1906-07,  pp.  5324  and  5327. 

2  Hon.  Mr.  Foster — Can.  Hansard,  1906-07,  p.  53i6. 

43 


GOVERNMENT  EXPENDITURES 

sums  therein  proposed  shall  be  final.  ...  If,  therefore, 
in  the  face  of  an  imperial  enactment,  this  Dominion 
Parliament  should  see  fit,  for  one  reason  or  another,  to 
make  some  special  grant  to  any  particular  Province, 
nothing  that  we  or  the  Imperial  Parliament  can  do  will 
prevent  it.  But  as  there  have  been  differences  in  the 
past  owing  to  provincial  jealousies  over  the  provincial 
subsidies,  we  have  thought  it  well  to  make  some  effort 
to  have  the  present  arrangement  made  final.  .  .  .  We 
have  undertaken  to  do  this  by  asking  the  imperial  author- 
ities to  declare  that  the  sums  granted  the  several  Prov- 
inces for  certain  purposes  shall,  for  those  purposes,  be 
final  and  unalterable.^ 

Although  Canada's  assembled  representatives  adopted 
such  a  declaration  of  finality,  the  Imperial  Parliament 
omitted  to  insert  the  word  "final'*  in  its  enabling  act. 
It  is  hardly  likely  that  the  English  government  would 
refuse  to  sanction  a  change  which  might  be  demanded 
hereafter  both  by  the  Dominion  Parliament  and  the  in- 
dividual Provinces.  Since  the  Provinces  regard  the 
Dominion  subsidies  paid  them,  not  as  voluntary  dona- 
tions from  the  central  government,  but  as  an  established 
right  which  they  acquired  when  they  agreed  to  con- 
federation, it  is  safe  to  say  that  an  attempt  will  be  made 
sooner  or  later  again  to  amend  the  subsidy  regulating 
clause  of  the  British  North  America  Act  in  favor  of  the 
Provinces.  On  a  later  page,  the  resultant  evils  and  the 
necessarily  demoralizing  effect  of  the  Dominion  system 
of  provincial  subsidies  will  be  pointed  out. 

Under  the  title  ''Provincial  Accounts,"  the  payments 
made  each  year  by  the  Dominion  government  to  each 
of  the  Provinces  are  set  forth  in  an  annual  volume 
'Tublic    Accounts"    prepared    and    submitted    to    the 

1  Hon.  W.  S.  Fielding— Can.  Hansard,  1906-07,  5330. 

44 


THE  CANADIAN  BUDGETARY  SYSTEM 

Minister  of  Finance  by  the  Deputy  Minister  of  Finance. 
In  the  accounts  thus  stated,  it  will  be  found  that  there 
are  certain  minor  fiscal  relations  between  the  Dominion 
and  the  Provinces  other  than  those  relating  to  the  in- 
terest on  debt  allowances  and  per  capita  subsidies.  The 
purposes  of  this  report  do  not  make  it  necessary,  how- 
ever, to  consider  these  special  or  less  important  items. 


45 


CHAPTER  IV 

GENERAL  ADMINISTRATIVE  PRACTICES 

Canada's  Fiscal  Year  and  Sessions  of  Parliament. 
When  the  Province  of  United  Canada  was  formed  in 
1 84 1,  the  colony's  fiscal  year  coincided  with  the  calendar 
year.  In  1864,  however,  the  fiscal  year  was  changed 
and  made  to  begin  on  July  i.  The  reason  for  this  de- 
viation from  the  original  practice  has  been  stated  as  fol- 
lows, by  one  who  had  been  himself  mainly  responsible 
for  bringing  this  about : 

The  change  in  the  fiscal  year  from  December  31st  to 
the  30th  of  June  was  not  done  without  very  grave  con- 
sideration. It  was  then  felt  that  the  governing  circum- 
stance in  the  estimates  for  this  country  was  the  harvest. 
The  30th  of  June  was  the  period  of  the  realization  of 
one  harvest  and  in  advance  of  the  reaping  of  the  ensuing 
one.  The  returns,  therefore,  were  made  up  to  the  time 
when  the  product  of  one  harvest  was  completely  ex- 
hausted, and  when  the  estimates  for  the  future  year  were 
necessarily  based  upon  the  results  of  the  preceding  har- 
vest. They  found  that  when  the  public  accounts  were 
made  up  to  the  31st  of  December  before  Parliament  met, 
and  this  was  not  usually  in  March  or  April  under  the 
old  system  but  towards  the  end  of  February  or  early 
in  March,  it  was  impossible  to  get  them  ready  to  lay 
before  Parliament  and  to  assist  in  its  deliberations  dur- 
ing the  session.  It  was  thought  by  going  back  to  the 
30th  of  June  there  would  be  no  difficulty  in  having  the 
public  accounts  and  the  departmental  reports  ready  to 
be  laid  before  Parliament  when  it  assembled.^ 

After  the  formation  of  the  Dominion,  a  law  was 
passed  in  1868  directing  that  the  period  June  30  to  June 

^  Mr.  Holton — Can  Hansard,  1877,  p.  1766. 

46 


THE  CANADIAN  BUDGETARY  SYSTEM 

30  should  constitute  the  Canadian  financial  year.  Less 
than  a  decade  later,  however,  an  agitation  arose  to  have 
the  financial  year  begin  at  an  earlier  period  in  the  year. 
The  moving  cause  for  this  proposed  change  was  the  in- 
creasing frequency  with  which  Parliament  met  during 
the  winter  months.  Unlike  the  Congress  of  the  United 
States,  the  Parliament  of  the  Dominion  does  not  begin 
its  annual  sessions  on  any  fixed  date  prescribed  by  law. 
The  time  of  convening  is  thus  selected  by  the  Admini- 
stration. 

In  the  early  days  after  confederation,  the  Canadian 
Parliament  was  usually  summoned  at  the  beginning  of 
spring.  As  the  amount  of  business  to  be  dispatched  in- 
creased with  the  growth  of  the  country,  it  became  more 
and  more  the  custom  to  call  Parliament  in  session 
earlier  in  the  year.  This  made  it  more  difficult  to  pre- 
pare the  necessary  financial  statements  for  the  informa- 
tion of  the  House  of  Commons.  As  explained  by  one 
of  the  Ministry  of  the  day : 

Very  great  inconvenience  had  been  experienced  as 
matters  now  stood,  owing  to  the  circumstance  that  the 
financial  year  terminated  in  the  center  of  two  working 
seasons.  It  was  a  matter  of  very  considerable  difficulty 
at  a  distance  of  eighteen  months  to  produce  accurate 
estimates,  particularly  for  such  departments  as  those  of 
public  works,  marine  and  fisheries  and  the  interior;  and 
these  difficulties  had  been  very  seriously  aggravated  by 
the  great  increase  in  their  territory  which  had  taken 
place  during  the  last  three  or  four  years.  Moreover, 
since  their  practice  of  meeting  very  early  in  the  year  in 
February  and  pvrhaps  earlier  occasionally  considerable 
difficulties  had  arisen  in  the  proper  preparation  of  the 
public  accounts;  despite  all  the  zeal  and  diligence  the 
officers  of  the  department  could  use,  they  found  it  barely 
possible  to  get  the  accounts  in  readiness  to  lay  on  the 

47 


GENERAL  ADMINISTRATIVE  PRACTICES 

table  when  the  House  met;  and  it  was  scarcely  possible 
with  all  their  diligence  for  ministers  to  have  a  sufficient 
length  of  time  to  become  acquainted  with  them.  Some 
confusion  had  occasionally  arisen  in  consequence,  and 
he  was  afraid  that  this  confusion  would  tend  to  increase 
in  the  future.  In  former  years,  this  was  by  no  manner 
of  means  the  case  because,  as  the  House  was  aware,  the 
average  time  for  the  meeting  of  Parliament  was  usually 
in  March  or  April.  With  a  view  to  remedying  these 
defects,  he  proposed  to  change  the  fiscal  year  so  as  to 
assimilate  the  period  for  the  closing  of  their  accounts 
with  the  period  at  which  the  accounts  in  Great  Britain 
were  closed,  and  this  was  about  the  31st  of  March." 

In  accordance  with  this  recommendation,  Canada's 
fiscal  year  was  finally  changed  in  1906  so  as  to  begin  on 
April  I.  The  statute  now  reads  that  *'the  public  ac- 
counts shall  include  the  period  from  the  first  day  of 
April  in  one  year  to  the  thirty-first  day  of  March  in  the 
next  year,  which  period  shall  constitute  the  fiscal  year."^ 

Since  this  change  took  effect  the  Canadian  Parlia- 
ment has  met  as  a  rule  earlier  than  formerly  and  has 
even  begun  its  sessions  in  November.  One  consider- 
able advantage  derived  from  this  earlier  convocation 
of  Parliament  is  the  possibility,  if  the  estimates  are  voted 
promptly,  of  starting  out-of-door  work  on  public  im- 
provements as  soon  as  weather  conditions  permit.  In 
a  country  with  a  long  winter  season  like  Canada,  failure 
to  begin  new  construction  before  mid-summer  often 
leads  to  costly  delays. 

Mr.  Mclntyre — They  did  not  commence  work  on  the 
breakwater  until  late  in  the  fall,  which  is  not  the  proper 
time  to  do  work  in  such  an  exposed  position.  The  work 
should  begin  in  the  summer  when  the  weather  is  calm. 

1  Sir  Richard  J.  Cartwright — Can.  Hansard,  1877,  P-  ^7^5- 

2  Section  50  of  Consolidated  Revenue  and  Audit  Act. 

48 


GENERAL  ADMINISTRATIVE  PRACTICES 

Sir  Hector  Langevin  (Minister  of  Public  Works) — I 
cannot  begin  to  work  unless  the  money  is  voted,  and,  as 
the  session  finishes  generally  about  May  or  June,  we 
cannot  begin  at  the  very  beginning  of  summer/ 

One  reason  why  we  have  changed  the  fiscal  year  is 
that  the  money  may  be  available  before  the  summer  is 
nearly  over.  These  works  cannot  be  proceeded  with  ia  ^\^ 
the  winter,  and  when  the  House  rises  in  July  or  August  A 
it  is  impossible  for  public  works  to  be  gotten  under  way 
before  the  winter  sets  in.  If  this  year  we  get  the  supply 
bill  sanctioned  within  the  month  of  April,  there  is  a  fair 
chance  of  letting  the  contract  and  having  the  work  done 
during  the  season.^ 

Consolidated  Revenue  Fund.  Following  the  Eng- 
lish example,  provision  is  made  for  a  Consolidated 
Revenue  Fund  constituted  of  "all  public  moneys  and  1  ^' 
revenue  over  which  the  Parliament  of  Canada  now  has 
the  power  of  appropriation."  In  this  connection  it  is  to 
be  observed  that  the  principle  thus  adopted  of  covering 
into  one  fund  all  the  revenues  of  the  government  is  more 
consistently  followed  than  it  is  in  Great  Britain;  for 
there,  as  is  shown  in  the  volume  on  the  System  of 
Financial  Administration  of  Great  Britain,  the  receipts 
from  certain  of  the  services  are  not  paid  into  the  Con- 
solidated Fund  but  are  retained  and  used  by  the  depart- 
ments collecting  them  under  authority  given  by  Parlia- 
ment in  what  are  known  as  "Appropriations  in  Aid." 

This  English  practice  finds  no  place  in  the  Canadian 
system  and  commendably  so.  By  Section  35  of  the 
Audit  Act  it  is  declared  that  "all  public  moneys,  from 
whatever  source  of  revenue  derived,  shall  be  paid  to 
the  credit  of  the  account  of  the  Minister  of  Finance  and 

1  Can  Hansard,  1886,  p.  1262. 

2  Mr.  Fisher— Can.  Hansard,  1906,  p.  6054. 

49 


THE  CANADIAN  BUDGETARY  SYSTEM 

Receiver  General  through  such  officers,  banks  or  per- 
sons, and  in  such  manner  as  the  said  Minister,  from 
time  to  time,  directs  and  appoints." 

The  same  section  goes  on  to  provide  that  all  moneys 
''received  by  any  officer,  clerk  or  employee  of  the  Senate 
or  House  of  Commons  of  Canada  as  fees  or  sums  in  any 
way  payable  in  connection  with  any  proceedings  before 
Parliament"  shall  be  paid  into  the  Consolidated 
Revenue  Fund,  and  the  same  provision  is  made  regard- 
ing refunds.     By  Section  37  it  is  declared  that — 

The  Minister  of  Customs,  the  Minister  of  Inland 
Revenue,  the  Postmaster  General,  and  all  other  Minis- 
ters, and  Deputy  Ministers,  officers,  clerks  or  persons 
charged  with  the  receipt  of  public  moneys,  shall  cause 
the  gross  revenues  of  their  several  departments  or  offices 
to  be  paid  at  such  times  and  under  such  regulations  as 
the  Minister  of  Finance,  from  time  to  time,  prescribes, 
to  an  account  to  be  called  the  account  of  the  Minister 
of  Finance  and  Receiver  General,  at  such  bank  or  banks 
as  are  determined  by  the  Minister  of  Finance. 

And  by  Section  38  it  is  declared  that — 

Every  officer  of  the  Customs  or  of  the  Inland  Revenue 
and  every  officer  otherwise  employed  in  the  collection  of 
the  revenue,  receiving  money  for  the  Crown,  shall  de- 
posit the  same  to  the  credit  of  the  account  of  the  Minister 
of  Finance  and  Receiver  General. 

The  comprehensiveness  of  these  provisions  is  still 
further  emphasized  by  the  section  of  the  act  devoted  to 
definitions,  in  which  it  is  declared  that — 

In  this  Act,  unless  the  context  otherwise  requires — 
"public  moneys,"  "public  revenue"  or  "revenue,"  means 
and  includes  and  appHes  to  all  revenue  of  the  Dominion 
of  Canada,  and  all  branches  thereof,  and  all  moneys, 
whether  arising  from  duties  of  customs^  excise  or  other 
duties,  or  from  the  post  office,  or  from  tolls  for  the  use 

50 


y 


GENERAL  ADMINISTRATIVE  PRACTICES 

of  any  canal,  railway  or  other  public  work,  or  from  fines, 
penalties  or  forfeitures  or  from  any  rents  or  dues,  or 
from  any  other  source  whatsoever,  whether  such  moneys 
belong  to  Canada  or  are  collected  by  officers  of  Canada 
for  or  on  account  of  or  in  trust  for  any  Province  forming 
part  of  Canada,  or  for  the  Government  of  the  United 
Kingdom  or  otherwise. 

Basis  upon  which  the  Public  Accounts  are  Ren- 
dered. As  is  pointed  out  in  the  report  on  the  British 
financial  system,  there  are  two  methods  of  keeping  the 
public  accounts ;  the  one  upon  an  accrual  basis,  the  other 
upon  a  cash  basis.  The  first  is  founded  upon  the  prin- 
ciple of  keeping  separate  and  intact  all  the  revenues  and 
expenditures  of  a  given  year  whether  or  not,  in  fact,  they 
are  actually  paid  in  or  out  during  the  twelve  months  of 
that  year.  This  is  the  system  adopted  by  France.  Ac-" 
cording  to  the  second  system,  the  accounts  of  each  year 
show  the  amounts  actually  received  or  paid  out  by  the 
Treasury  during  the  year  without  regard  to  whether 
or  not,  from  a  logical  or  commercial  standpoint,  they 
pertain  to  that  year.  Canada  has  followed  the  example 
of  Great  Britain  and  the  United  States  in  adopting  the  \y 
second  or  cash  system.^  ^"^^ 

Closing  of  the  Accounts  of  the  Fiscal  Year:  Rule 
as  to  Lapsing  of  Unexpended  Balances.  When  the 
first  Dominion  Parliament  was  called  upon  to  pass  legis- 
lation in  regard  to  the  public  accounts,  British  precedents 
were  closely  followed.  The  law  that  was  finally  enacted 
provided  that  the  public  accounts  should  include  the 
period  from  July  i  to  June  30  [since  changed  to  read 

iThe  relative  advantages  of  the  two  systems  are  discussed  in  the 
report  on  the  Financial  Administration  of  Great  Britain,  p.  25  et  seq., 
and,  still  more  fully  by  Stourm  in  his  work,  The  Budget,  a  translation 
of  which  has  been  published  by  the  Institute  for  Government  Re- 
search.   See  also  H.  C.  Adams,  The  Science  of  Finances,  p.  201  et  seq. 

SI 


6' 


THE  CANADIAN  BUDGETARY  SYSTEM 

from  April  i  in  one  year  to  March  31  in  the  next],  and 
that  "all  estimates  submitted  to  Parliament  shall  be  for 
the  services  coming  in  the  course  of  payment  during  the 
financial  year ;  and  all  balances  of  appropriations  which 
/  I  remain  unexpended  at  the  end  of  the  financial  year  shall 
lapse  and  be  written  oflF/' ' 

The  clause  relating  to  the  treatment  of  unexpended 
balances  has  been  elucidated  as  follows: 

Under  that  clause,  all  amounts  unexpended  at  the  end 
of  the  term  for  which  money  may  be  voted  are  written 
oflf.  If  $100,000  have  been  voted  and  if  at  the  end  of 
the  term  but  $75,000  have  been  spent,  the  remaining 
$25,000  are  not  carried  on  to  any  future  service,  but 
must  be  written  off,  and  a  new  vote  taken  for  everything 
wanted  for  that  service  thereafter.' 

Not  long  after  the  passage  of  the  Public  Account  Law, 
however,  it  became  apparent  that  the  attempted  copying 
of  the  British  plan  of  having  the  public  accounts  close 
immediately  on  the  expiration  of  the  fiscal  year  would 
prove  unworkable  in  Canada,  the  reasons  for  which  may 
be  shown  by  quoting  the  words  of  a  member  of  the 
Parliament : 

The  close  of  the  fiscal  year  and  the  close  of  the  ac- 
counts of  the  fiscal  year  are  two  very  different  things. 
In  Great  Britain,  the  fiscal  year  closes  on  the  31st  of 
March,  and  the  accounts  close  immediately ;  all  balances 
lapse,  and  the  new  year  begins  with  the  appropriations 
for  the  year.  That  is  quite  possible  in  a  country  like 
Great  Britain,  with  a  comparatively  small  area,  a  dense 
population,  and  means  of  communication  by  railway, 
telegraph  and  telephone,  which  are,  of  course,  beyond 
the  means  of  communication  in  a  country  of  such  vast  / 

131st  Victoria,  Ch.  45,  Sec.  38.  "    -  J 

2  Hon.  Christopher  Dunkin,  Financial  Statement  to  Quebec  House 
of  Assembly,  1868. 

52 


GENERAL  ADMINISTRATIVE  PRACTICES 

extent  as  the  Dominion  of  Canada.  It  was,  therefore, 
necessary  to  allow  a  certain  period  after  the  close  of  the 
fiscal  year  for  the  closing  of  the  accounts.  As  a  matter 
of  fact,  after  the  close  of  the  fiscal  year  1904-05  no  less 
than  $17,000,000  came  into  the  accovmts  between  that 
time  and  the  period  allowed  by  the  regulations  for  the 
closing  of  the  accounts.  The  payments  made  between 
the  closing  of  the  fiscal  year  and  the  closing  of  the  ac- 
counts last  year  were  more  than  the  total  expenditures 
of  the  Dominion  for  several  years  immediately  following 
the  beginning  of  the  union. ^ 

Besides  failing  to  adhere  to  the  British  rule  as  to  the ' 
time  for  the  closing  of  the  public  accounts,  the  Canadian  j     / 
authorities  in  1876  brought  about  a  change  in  the  pro- 1 
vision  of  the  law  concerning  the  lapsing  of  unexpended  \ 
balances  of  appropriations.     The  innovation  was  intro-  / 
duced  (which  is  still  in  effect)  of  allowing  the  govern-' 
ment  by  means  of  an  order  in  council  to  extend  for  a  : 
period  of  three  months  the  time  within  which  appropria-  \ 
tions  made  for  the  expiring  fiscal  year  might  be  ex- J 
pended. 

The  present  law  upon  this  point  is  found  in  Section  50 
of  the  Consolidated  Revenue  and  Audit  Act,  w^hich  reads 
as  follows : 

The  public  accounts  shall  include  the  period  from  the 
first  day  of  April  in  one  year  to  the  thirty-first  day  of 
March  in  the  next  year,  which  period  shall  constitute 
the  fiscal  year;  all  estimates  submitted  to  Parliament 
shall  be  for  the  services  coming  in  course  of  payment 
during  the  fiscal  year ;  and  all  balances  of  appropriation 
which  remain  unexpended  at  the  end  of  the  fiscal  year 
shall  lapse  and  be  written  off:  Provided,  That  upon  cause 
being  shown  to  the  satisfaction  of  the  Governor  in  Coun- 
cil, he  may,  by  order  in  council  to  be  made  before  the 

1  Hon.  W.  S.  Fielding — Can.  Hansard,  1906,  p.  3820. 

53 


THE  CANADIAN  BUDGETARY  SYSTEM 

first  day  of  May  each  year,  extend  the  time  for  finally 
closing  the  account  of  any  appropriation,  for  a  period 
of  not  more  than  three  months  from  the  end  of  the  fiscal 
year,  after  the  expiration  of  which  extended  time,  and 
not  before,  the  balance  of  such  appropriation  shall  lapse 
and  be  written  off. 

The  concession  thus  granted,  it  is  to  be  emphasized,  is 
not  one  which  permits  any  new  obligation  or  liability  to 
be  incurred  after  the  expiration  of  the  fiscal  year.  It 
simply  makes  it  possible,  for  three  months  after  the  ex- 
piration of  that  year,  to  use  funds  granted  for  that  year 
to  be  used  in  payment  of  liabilities  that  have  been  in- 
curred but  not  yet  paid  during  that  year.  This  con- 
struction was  definitely  settled  as  long  ago  as  1888,  by 
an  order  in  council.^ 

^  Order  in  Council,  June  2y,  1888. — The  Treasury  Board  had  under 
consideration  a  communication  from  the  Auditor  General  respecting  the 
interpretation  of  Section  37  of  the  Audit  Act,  which  provides  for  the 
extension  of  time  for  closing  the  Appropriation  Accounts. 

The  Auditor  General  states  that  he  understands  the  Section  to  mean: 
"That  an  appropriation  account  can  be  kept  open  for  any  time  fixed  by 
the  Council,  up  to  three  months,  for  the  purpose  of  charging  against  a 
vote  all  services  or  supplies  for  which  the  vote  was  taken,  that  is,  those 
rendered  before  June  30." 

As  the  present  practice  of  bringing  down  the  balances  of  appropria- 
tions for  three  months,  and  thereby  lengthening  the  financial  year  to 
fifteen  months,  has  been  productive  of  delay  in  the  preparation  of  accounts 
for  Parliament,  and  with  the  view  of  definitely  deciding  what  course 
should  be  followed,  the  matter  was  referred  to  the  Department  of  Justice 
for  opinion. 

The  Deputy  Minister  of  Justice  reports:  "The  question  is,  whether, 
upon  an  Order  in  Council  having  been  passed  as  specified  in  the  Section, 
a  department  may  make  additional  expenditures  and  incur  increased 
liabilities  upon  the  strength  of  the  original  estimate;  or  whether  the 
extension  referred  to  in  the  Section  is  only  for  the  purpose  of  enabling 
a  department  to  pay  after  June  30,  liabilities  that  have  been  incurred 
previously  to  that  date.  It  would  appear  that  the  latter  interpretation  is 
the  correct  one.  The  Section,  without  the  proviso,  categorically  provides 
that  any  balance  unexpended  on  June  30,  shall  lapse,  and  be  written  off. 
The  proviso  does  not  either  expressly  or  by  implication,  give  a  depart- 
ment power  to  make  a  new  expenditure,  and  if  that  power  is  not  con- 
tained in  the  proviso,  it  is  nowhere ;  it  does  not  exist.  The  only  meaning 
to  be  drawn  from  the  proviso  is  that  the  extension  is  made  for  the  pur- 
pose of  paying,  after  June  30,  out  of  the  original  appropriations,  such 
accounts  as  had  at  that  date  been  incurred." 

The  Board,  after  careful  consideration  of  the  matter,  recommended  to 

54 


GENERAL  ADMINISTRATIVE  PRACTICES 

It  is  to  be  observed  that  any  amount  spent  out  of  the 
sums  voted  by  ParHament  during  such  extended  term  is 
treated  as  an  expenditure  chargeable  to  the  new  fiscal 
year  despite  the  fact  that  the  appropriation  was  made  on 
account  of  the  fiscal  year  already  passed. 

Our  rule  is  that  everything  spent  after  the  ist  of  July 
is  charged  to  the  present  year.  The  law  does  not  allow 
us  to  charge  to  the  past  year,  but  only  to  prolong  the 
period  during  which  the  money  can  be  spent,  and  it  must 
be  charged  within  the  year  in  which  it  is  spent.^ 

Revotes  of  Lapsed  Estimates.  As  a  necessary  s^ 
sequence  to  the  system  of  lapsing  appropriations  in 
vogue  in  Canada,  revotes  of  sums  already  once  granted 
by  Parliament  are  often  unavoidable.  In  the  case  of 
public  improvements,  especially,  the  amounts  placed  at 
the  disposal  of  the  government  very  frequently  cannot 
be  expended  within  the  twelve  months  time  limit  even  if 
the  utmost  diligence  be  observed.  Hence,  if  the  work 
already  started  is  to  be  carried  to  completion.  Parliament 
must  revote  the  unused  balance  of  the  original  appro- 
priation. 

In  the  British  budget  practice,  the  theory  is  to  have"T^ 
a  revote  of  an  estimate  cover  simply  the  unexpended 
balance  of  the  amount  previously  appropriated.  The 
items  are  not  inserted  in  the  estimates  unless  it  is  in- 
tended to  spend  the  money  asked  for  during  the  coming 
fiscal  year. 

The  Government  cannot  find  in  all  the  history  of  the 

Council  that  for  the  current  fiscal  year  the  present  practice  be  retained, 
so  that  no  inconvenience  may  be  experienced  by  the  departments,  the 
Auditor  General  having  intimated  that  he  is  willing  that  for  the  present 
year  such  course  be  adopted ;  but  as  the  law  is  clearly  in  accordance  with 
the  contention  of  the  Auditor  General,  the  Board  are  of  opinion  that 
under  existing  circumstances  the  practice  now  followed  cannot  be  con- 
tinued.   John  J.  McGee,  C.  P.  C. 

1  Hon.  Sir  Richard  J.  Cartwright— Can.  Hansard,  1878,  p.  2467. 

55 


THE  CANADIAN  BUDGETARY  SYSTEM 

British  Parliament  any  precedent  for  sums  of  money 
being  placed  in  the  estimates  and  voted,  prima  facie  to 
be  expended,  when  the  Chancellor  of  the  Exchequer 
knew  that  it  was  absolutely  impossible  to  spend  them/ 

In  the  Dominion,  however,  the  practice  is  being  more 
and  more  followed  of  inserting  items  of  expenditure  in 
the  estimates,  particularly  in  regard  to  public  works 
which  the  authorities  themselves  fully  realize  cannot  pos- 
sibly be  carried  out  or  proceeded  with  within  the  period 
of  a  year.  Nevertheless,  even  though  an  improvement 
has  not  been  started  and  no  likelihood  exists  of  getting 
it  under  way  in  the  near  future,  Parliament  is  asked  to 
revote  the  amount  first  asked  for.  Consequently,  many 
of  the  revotes  of  the  Canadian  House  of  Commons  dis- 
pose not  of  an  unexpended  balance,  but  make  a  re- 
appropriation  of  the  entire  amount  originally  voted. 
This  is  illustrated  by  the  history  of  the  appropriation 
for  the  proposed  new  drill  hall  in  the  city  of  Ottawa. 

This  is  one  of  the  old  hardy  annuals.  I  do  not  know 
when  we  started  in  with  this  new  drill  hall,  but  I  see  that 
it  appears  in  the  Estimates  for  1912-13,  13-14,  14-15, 
15-16,  and  16-17.  This  is  the  fifth  time  that  we  have 
been  asked  to  vote  this  item  for  the  same  amount  of 
$50,000.' 

As  will  be  explained  at  further  length  hereafter,  the 
practice  of  swelling  the  Canadian  estimates  of  public 
expenditures  by  items  which  cannot  be  spent  in  the  im- 
mediate future  has  produced  various  evils.  Without 
attempting  to  enumerate  them  all  at  this  time,  the  fol- 
lowing excerpts  from  the  Dominion  House  of  Commons 
debates,  both  deaHng  with  revotes,  can  be  here  ad- 
vantageously quoted: 

1  Mr.  MacDonald — Can.  Hansard,  1916,  p.  2940. 

2  Mr.  Sinclair — Can.  Hansard,  1916,  p.  2940. 

56 


GENERAL  ADMINISTRATIVE  PRACTICES 

It  is  a  very  bad  principle  for  Parliament  to  vote  money 
when  it  is  not  expended.  The  idea  is  to  have  money 
available  in  the  event  of  an  election,  so  that  the  govern- 
ment can  become  active  in  spending  it.  We  should  not 
encumber  our  estimates  from  year  to  year  with  these 
revotes.^ 

I  think  that  the  system  of  voting  money  every  year 
without  using  it,  is  entirely  wrong.  Unless  it  is  clearly 
shown  to  the  Minister  that  it  is  absolutely  necessary  a 
public  building  be  erected  in  the  near  future,  the  vote 
should  not  be  taken.  You  keep  that  vote  standing  from 
year  to  year  and  do  nothing  with  it.  If  by  the  accidents 
of  life,  that  constituency  should  become  vacant,  you  can 
use  this  vote  to  carry  the  election  and  it  thus  has  a 
corrupting  influence.^ 

Capital    and    Revenue    Accounts.      One    of    the 

peculiarities  of  the  Canadian  budget  practice  is  the  at- 
tempted distinction  between  capital  and  revenue  ex- 
penditures. In  the  public  accounts  of  the  Dominion,  the 
estimates  for  the  department  of  public  works  first  recite 
certain  proposed  expenditures  chargeable  to  capital  and 
a  further  list  of  intended  appropriations  chargeable  to 
income.  But  amounts  spent  on  public  works  are  not  the 
only  expenditures  of  the  Dominion  government  charged 
to  capital  account.  Under  the  same  category  have  been 
placed  at  various  times  expenditures  on  Dominion 
lands,  the  Canadian  militia,  and  the  former  Northwest 
Territories,  advances  to  the  Canadian  Pacific  and  other 
railways,  and  the  debts  allowed  to  the  Canadian 
Provinces.  Of  the  total  expenditures  of  the  Dominion 
from  the  beginning  of  confederation,  to  the  close  of  the 
fiscal  year  191 5,  $2,166,551,376.71  were  charged  to  the 

1  Mr.  Sproule— Can.  Hansard,  1906-07,  p.  6054. 

3  Mr.  Sproule— Can.  Hansard,  1902,  p.  721. 

See  Appendix  3  (c)  for  revotes  in  government  estimates. 

57 


THE  CANADIAN  BUDGETARY  SYSTEM 

Consolidated  Fund  or  ordinary  revenue  account,  and 
$563,286,916.92  to  capital  account. 

As  the  following  quoted  passages  will  show,  no  hard 
and  fast  rule  has  been  adhered  to  in  determining  what 
items  shall  be  credited  to  capital  account : 

There  is  one  phase  of  this  public  expenditure,  which 
has  always  been  to  me  a  considerable  mystery.  That  is 
the  rule  of  the  department  as  to  what  shall  be  charged 
to  capital  and  what  to  revenue  account.  It  seems  diffi- 
cult to  understand  how  the  construction  of  a  lighthouse 
may  be  charged  to  revenue  account  but  the  construction 
of  a  permanent  pier  is  to  be  charged  to  capital  account.^ 

Mr.  Ames — Does  it  not  seem  strange  to  charge  car- 
pets and  matting  that  wear  out  in  the  course  of  a  few 
years  to  capital  account? 

Mr.  Pugsley — It  has  been  the  practice,  I  believe,  ever 
since  confederation  to  charge  the  original  furnishings  of 
buildings  at  the  capital  to  capital  accounts.^ 

At  Ottawa,  the  Parliament  buildings  and  the  various 
departmental  buildings  are  not  paid  for  out  of  current 
yearly  revenue,  but  are  charged  to  capital  account.' 

In  Ontario,  amounts  spent  on  public  buildings  are  not 
charged  to  capital  account,  while  here  [Quebec]  amounts 
expended  for  repairs  are  ascribed  to  capital.* 

The  Capital  Account  as  kept  by  the  Government  is  a 
useless  and  misleading  system.  Road  machines  to  the 
amount  of  $7978,  have  been  placed  in  that  account 
charge  for  rights  of  way,  never  opened  for  public  use 
and  temporary  repairs  of  all  kinds  abound  there.  Even 
the  cost  of  tearing  down  an  old  bridge  is  charged  in  this 
account.*^ 

1  Mr.  Ames — Can.  Hansard,  1906-07,  p.  5871. 
'^  Can.  Hansard,  1909,  p.  1258. 

*  Budget  Speech,  Ontario,  House  of  Assembly,  1898. 

*  Mr.  Nantel — Quebec,  House  of  Assembly,  December  12,  1890. 

»  Journal,  Prince  Edward  Island,  House  of  Assembly,  1908,  p.  143. 

58 


GENERAL  ADMINISTRATIVE  PRACTICES 

While  there  has  been  a  lack  of  consistency  in  main- 
taining this  distinction  between  capital  and  revenue  ac- 
counts the  practice  has  been  defended.  It  has  been 
claimed,  for  example,  that  the  government's  credit  is  en- 
hanced and  the  sale  of  its  securities  aided  by  the  estab- 
lishment of  a  capital  account. 

This  [new  Parliament  building]  is  a  real  asset  as  it 
represents  a  building  of  great  value.  It  is  only  right  that 
the  money  expended  on  objects  of  this  nature  should 
appear  as  a  set-ofif  against  our  consolidated  debt.  In  this 
way,  our  financial  position  would  be  better  appreciated 
at  home  and  abroad,  and  would  give  increased  confidence 
to  investors  in  our  securities.^ 

More  could  be  said  for  this  plea  if  the  assets  set  up 
against  the  debts  of  the  various  governments  were 
always  of  a  lasting  nature  or,  where  perishable,  had  their 
value  replaced  by  means  of  a  sinking  fund.  But  this  is 
not  the  case.  Much  of  the  indebtedness  of  the  Canadian 
Provinces  has  been  contracted  for  the  purpose  of  build- 
ing improved  roads  and  bridges  which  do  not  constitute 
imperishable  public  improvements. 

Every  honorable  gentleman  knew  that  the  steel  bridge 
was  not  any  more  enduring  than  a  wooden  bridge,  if  it 
was  not  carefully  looked  after  from  year  to  year.  There 
was  an  old  story  of  $600,000  borrowed  for  road  pur- 
poses, which  could  not  be  considered  an  enduring  monu- 
ment so  far  as  capital  expenditure  for  permanent  work 
was  concerned.^ 

It  was  a  sound  principle  that  if  the  country  were 
getting  something  of  a  lasting  character,  it  might  be 
necessary  to  borrow  money  for  the  purpose  of  getting 
public  works.  But,  if  the  money  went  into  public  works 
that  were  not  permanent  the  Province  would  eventually 

1  Hon.  Joseph  Sheyn,  Budget  Speech  (Quebec)  December  9,  1890. 
a  Mr.  Tanner— Nova  Scotia  Assembly  Debates,  1915,  p.  201. 

59 


/ 


THE  CANADIAN  BUDGETARY  SYSTEM 

have  nothing  to  show  for  the  permanent  debt.  Money 
spent  upon  a  railway  secures  in  return  something  of  a 
permanent  character,  but  would  money  expended  on 
roads  and  bridges  secure  in  return  a  permanent  asset? 
No/ 

In  Canada  the  aim  has  been  not  so  much  to  bring 
/  I  about  an  equilibrium  between  the  total  revenues  and  out- 
lays of  the  government  as  to  have  the  revenues  and  ex- 
penditures chargeable  to  revenue  account  balance. 

In  place  of  revenue  and  capital  accounts,  the  expres- 
sion ordinary  and  extraordinary  expenditure  is 
frequently  employed. 

There  never  was  a  government  in  this  Province  or 
any  other  Province  of  Canada  or  in  the  Dominion,  which 
took  into  consideration  capital  expenditure  for  the  year 
in  endeavoring  to  place  before  the  country  a  statement 
of  their  financial  operations  for  the  year  showing  the 
surplus  which  they  had.  It  was  always  the  ordinary 
revenues  and  expenditures  which  were  given. ^ 

Since  no  clearly  fixed  line  has  existed  in  Canada  be- 
tween capital  and  revenue  appropriations,  items  of  ex- 
penditure can  be  shifted  at  the  whim  of  the  Government 
from  one  account  to  another.^  Hence  the  government 
\  of  the  day  is  under  a  constant  temptation  to  manipulate 
the  public  accounts,  in  order  to  make  a  favorable  finan- 
cial showing.  Thus  in  1888,  the  Dominion  Minister  of 
Finance  was  able  to  report  a  small  surplus  in  place  of  an 
anticipated  deficit  by  crediting  the  receipts  from  the  sale 

1  Mr.  Wilcox — Nova  Scotia  Assembly  Debates,  1895,  p.  148. 

2  Hon.  Dr.  Landry — New  Brunswick  Assembly  Debates,  1915,  p.  54. 

3  "Collingwood  Harbor,  Rainy  River  and  Nanaimo  Harbor,  just  the 
kind  of  expenditure  we  have  been  doing  for  years  out  of  consolidated 
revenue  fund,  I  find  have  been  charged  to  capital.  There  seems  to  be 
no  reason  why  they  should  be  differentiated  from  other  expenditures 
of  like  kind.  It  entirely  vitiates  all  possible  comparisons  that  can  be 
made."    Mr.  Foster — Can.  Hansard,  1896,  2d  session,  p.  2549. 

60 


GENERAL  ADMINISTRATIVE  PRACTICES 

of  government  lands  in  the  Northwest  to  income  instead 
of  to  capital  account  as  had  been  the  custom  in  preceding 
years. 

Often  the  distinction  is  made  use  of  merely  to  hide 
rapidly  growing  expenditures. 

There  seems  to  be  a  tendency  to  lessen  the  amount 
chargeable  to  Consolidated  Fund  by  charging  these 
amounts  to  capital  when  they  ought  to  be  charged  fo 
Consolidated  Fund.  I  hold  that  the  Government  is  not 
warranted  in  doing  this.  It  creates  confusion  in  our 
financial  statements,  and  the  comparisons  between  the 
expenditures  of  the  different  years  cannot  properly  be 
made.  The  present  Government  have  charged  $600,000 
for  Dominion  lands  to  capital  which  were  formerly 
charged  to  income,  and  here  are  other  instances  where 
these  gentlemen  may  conceal  one  or  two  million  dollars 
of  expenditure  in  a  year  or  two,  by  charging  to  capital 
what  ought  to  be  charged  to  Consolidated  Revenue.  I 
protest  against  this  mode  of  manipulating  and  doctoring 
the  accounts.^ 

The  distinctions  that  have  been  made  in  the  past  few 
years  between  ordinary  and  special  or  extraordinary 
expenditures  have  been  delusive  and  intended  to  cover 
up  the  actual  deficiency  of  the  revenue  to  meet  its  legiti- 
mate obligations  and  have  also  been  made  the  excuse 
and  ground  for  contracting  loans. ^ 

Regarding  the  desirability  of  distinguishing  between 
expenditures  for  capital  outlays  and  for  current  ex- 
penses there  can  be  no  question.  The  attempt  on  the 
part  of  Canada  to  make  this  distinction  must  therefore 
be  held  to  be  one  of  the  merits  of  its  system  of  financial 
administration.  It  is  evident,  however,  from  the  fore- 
going, that  the  advantages  that  should  accrue  from  this 

1  Mr.  Charlton— Can.  Hansard,  1884,  p.  1604. 

2  Hon.  John  S.  Hull,  Budget  Speech  (Quebec),  December  5,  1893. 

61 


/ 

/ 


THE  CANADIAN  BUDGETARY  SYSTEM 

policy  have  been  almost  wholly  lost  through  the  failure 
on  the  part  of  the  government  to  apply  the  principle 
adopted  properly  in  practice.  This  has  been  due  to  two 
things :  First,  a  failure  to  define  what  expenditures  shall 
be  deemed  to  be  capital  outlays  and  rigidly  to  adhere 
\j  to  such  definition ;  and,  second,  a  deliberate  misuse  of  the 
distinction  for  the  partisan  purpose  of  concealing  the 
real  trend  of  government  expenditures.  The  whole  ex- 
perience of  Canada  in  respect  to  this  feature  of  its  sys- 
tem of  financial  administration  furnishes  another 
illustration  of  the  necessity  that  there  shall  exist  what  is 
aptly  termed  a  treasury  conscience,  as  well  as  features 
nominally  conforming  to  proper  principles  and  prac- 
tices. 


62 


CHAPTER  V 

^  7 

EXECUTIVE  EXPENDITURES  WITHOUT       J 
LEGISLATIVE  SANCTION 

It  is  a  fundamental  principle  in  all  systems  of  re- 
sponsible government  that  no  sums  of  the  public  moneys 
shall  be  expended  without  specific  authority  duly 
granted  by  the  legislature.  This  rule  is  nominally  ac- 
cepted in  Canada. 

The  very  ABC  of  our  parliamentary  constitution  is 
this:  that  no  money  shall  be  expended  by  the  Govern- 
ment of  this  country  without  the  previous  sanction  of 
Parliament.  I  need  not  waste  words,  I  hope,  in  this 
House  in  elaborating  so  simple  and  well  known  a  propo- 
sition as  that/ 

Governor  General's  Warrants.  It  will  be  found, 
however,  that  the  rule  is  frequently  honored  in  the 
breach.  It  cannot  be  said,  however,  that  the  practice  is 
illegal,  since  provision  is  made  for  it  in  the  various 
dominion  and  provincial  audit  acts.  In  the  case  of  the 
Dominion,  the  statute  reads  as  follows : 

If,  when  Parliament  is  not  in  session,  any  accident 
happens  to  any  public  work  or  building  which  requires 
an  immediate  outlay  for  the  repair  thereof,  or  any  other 
occasion  arises  when  any  expenditure  not  foreseen  or 
provided  for  by  Parliament  is  urgently  and  immediately 
required  for  the  public  good,  then  upon  the  report  of  the 
Minister  of  Finance  and  Receiver-General  that  there  is 
no  parliamentary  provision,  and  of  the  Minister  having 
charge  of  the  service  in  question,  that  the  necessity  is 
urgent,  the  Governor-in-Council  may  order  a  special 
warrant  to  be  prepared,  to  be  signed  by  the  Governor- 

^  Sir  Richard  Cartwright — Can.  Hansard,  1891,  p.  4537- 

63 


THE  CANADIAN  BUDGETARY  SYSTEM 

General  for  the  issue  of  the  amount  estimated  to  be 
required/ 

The  clause  just  cited  marks  a  radical  departure  from 
England's  budget  procedure. 

The  clause  of  this  statute  has  been  frequently  called  a 
most  peculiar  provision.  It  was  not  intended  to  give 
great  scope  to  the  Executive.  It  is  not  to  be  found  in 
the  English  system.  There  is  not  in  England  a  case 
where  the  Executive  can  spend  money  that  has  not  been 
appropriated  by  Parliament.^ 

We  alone,  I  believe,  of  all  the  English-speaking  com- 
munities that  have  self-government,  have  given  to  the 
Executive  this  power  of  obtaining  money  by  means  of 
Governor's  warrants.  So  far  as  my  research  has  gone, 
there  is  no  such  authority  in  England,  and,  so  far  as  I 
know,  there  is  no  such  authority  in  any  of  the  other 
colonies.  Our  case  is  one  in  which  we  have  thought  fit 
to  delegate  to  the  Executive,  under  exigencies  mentioned 
in  the  Act  of  Parliament,  the  power  to  get  money  which 
the  people  had  not  thought  fit  to  vote.'' 

Governor  General's  warrants  were  known  in  the 
British  North  American  colonies  long  before  con- 
federation and  their  employment  was  authorized  by  one 
of  the  earliest  statutes  passed  by  the  first  Dominion 
Parliament.  Originally  these  warrants  were  intended 
to  be  resorted  to  only  under  the  two  conditions 
enumerated  below : 

For  instance,  suppose  there  is  no  parliamentary  appro- 
priation made  by  Parliament  for  any  repair  or  extra 
work  upon  this  parliamentary  Chamber  in  which  we  are 
concerned ;  and  suppose  that  in  the  interim  of  the  session 
a  fire  takes  place,  and  this  Chamber  is  partially  or  totally 
destroyed  and  it  is  necessary  that  it  shall  be  repaired 

1  Chapter  29,  Sec.  49 — Victoria  R.  S.  C 

2  Sir  Charles  Hibbert  Tupper — Can.  Hansard,  1896,  id  Session,  p. 
692. 

8  Mr.  McCarthy — Can.  Hansard,  1896,  2nd  Session,  p.  735. 

64 


EXPENDITURES  WITHOUT  SANCTION 

or  rebuilt  for  the  approaching  session  of  Parliament; 
then,  in  that  case,  the  condition  precedent  is  complied 
with,  and  a  Governor-General's  warrant  may  issue, 
under  the  Act  which  I  have  quoted,  for  a  sufficient  sum 
of  money  to  repair  or  replace  this  Chamber.  If  there  is 
a  public  wharf  at  which  a  large  and  important  amount 
of  business  is  transmitted,  and  by  a  storm  or  other  acci- 
dent it  is  destroyed,  and  the  conditions  of  trade  and  com- 
merce make  it,  in  the  public  interest,  urgent  that  it  shall 
be  at  once  repaired  or  replaced,  and,  if  there  be  no  parlia- 
mentary appropriation  and  the  accident  has  not  been 
foreseen,  then,  in  that  case,  a  Governor-Generars  war- 
rant may  issue,  and  the  work  may  be  replaced  or 
repaired.  There  is  also  a  second  condition  precedent, 
and  it  is  this:  when  any  other  occasion  arises  for  an 
expenditure  which  is  not  foreseen  or  provided  for  by 
Parliament,  and  for  which  there  is  an  urgent  and  imme- 
diate necessity.^ 

Instead  of  being  sparingly  resorted  to  only  in  the  cases      \    / 
just  described  as  primarily  contemplated,  the  practice  in 
the  Dominion  for  many  years  was  to  issue  Governor 
General's  warrants  for  large  amounts  and  on  all  sorts 
of  occasions. 

In  the  year  1879-80  the  government  at  Ottawa  ex- 
pended under  the  authority  of  order-in-council  without 
the  authority  of  Parliament,  or  took  authority  by  order- 
in-council  without  a  vote  by  Parliament  to  expend  the 
sum  of  $685,253.  For  the  expenditure  of  that  amount 
they  had  no  parliamentary  authority  but  simply  the 
power  of  ''might."  In  the  year  1880-1881  Governor- 
General's  warrants  were  drawn  for  the  sum  of  $845,000. 
For  this  there  was  no  vote  by  Parliament.  In  1882- 
1883  Governor-General's  warrants  were  drawn  for  sums 
amounting  to  $589,000.  For  the  year  1883-1884 
Governor-General's  warrants  were  drawn  for  the  sum 

1  Mr.  Foster— Can.  Hansard,  2nd  Session,  1896,  p.  623. 

65 


;      THE  CANADIAN  BUDGETARY  SYSTEM 

of  $1,175,000.  In  1884-1885  Governor-Generars  war- 
rants were  drawn  for  $734,000.  In  1885- 1886  Gov- 
ernor-Generars warrants  were  drawn  for  the  sum  of 
$3,884,221.  This  is  sufficient  to  show  that  there  is 
authority  for  such  expenditure  outside  of  the  mere 
annual  vote  of  ParUament.^ 

I  find  that  from  30th  May,  1890,  down  to  28th  April, 
1 89 1,  Government  took  authority  by  Governor-Generars 
warrants  to  demand  no  less  than  eighty-seven  separate 
sums,  aggregating  $1,680,317.  ...  It  appears  to  me 
that  a  very  large  number  of  these  warrants  have  been 
issued  under  circumstances  which  in  no  way  warranted 
their  use.  I  have  not  time  to  go  through  with  them  all 
in  detail,  but  I  will  instance  one  which  was  issued  on 
28th  April,  1891.  That  was  a  grant  of  $75,000  to  the 
Canadian  Pacific  Railway  Company  for  post  office 
expenditures  under  a  certain  Order-in-Council  passed 
on  loth  February.  I  submit  that  in  no  shape  or  way 
did  that  particular  item  come  within  a  fair  construction 
of  the  clause  in  the  Audit  Act,  which  alone  gives  power 
to  issue  Governor-Generars  warrants.  That  was  not 
caused  by  any  sudden  accident  to  a  public  building,  nor 
was  it  one  of  those  classes  of  expenditures  which  require 
urgent  and  immediate  action  as  contemplated  by  that 
Act.  The  Canadian  Pacific  Railway  Company  was 
abundantly  well  able  to  wait  for  their  money  until  Par- 
liament had  voted  it,  and  there  was  in  that  case  as  in 
many  others,  no  reason,  no  justification  whatever  for 
paying  this  sum  of  money  over  without  the  consent  of 
Parliament.^ 

The  warrant  to  the  Canadian  Pacific  Railway  Com- 
pany just  referred  to  was  issued  on  the  very  day  pre- 
ceding  the   meeting   of   Parliament.     A    similar    case 

1  Mr.  Fielding — Nova  Scotia,  House  of  Assembly  Debates,  1889-90, 
p.  241. 

-  Sir  Richard  Cartwright — Can.  Hansard,  1891,  p.  4538. 

66 


EXPENDITURES  WITHOUT  SANCTION 

occurred  in   1888.     To  the  criticism  which  has  been 
quoted,  the  following  tu  quoque  was  made: 

The  honorable  gentleman  finds  fault  with  the  present 
Government  for  having  asked  a  Governor-Generars 
warrant  to  meet  current  expenses  immediately  maturing, 
in  the  face  of  Parliament  meeting,  and  without  an 
appropriation  bill  having  been  passed  for  these  expendi- 
tures. Now,  let  us  see  what  the  honorable  gentleman 
did  in  1888.  In  that  year  Parliament  met  on  the  23rd 
of  February.  On  the  22nd  of  February,  the  day  before 
Parliament  met,  the  honorable  gentleman  obtained  a 
Governor-Generars  warrant  for  the  sum  of  $477,000  to 
pay  the  working  expenses  of  the  Intercolonial  Railway. 
There  was  no  appropriation  previously  made  for  that 
sum.^ 

So  long  as  the  order  in  council  is  passed  before  Par- 
liament meets,  the  warrant  may  be  legally  issued  even 
though  it  be  not  actually  signed  by  the  Governor  Gen- 
eral until  after  Parliament  is  in  session.  An  instance 
of  this  kind  occurred  in  1887,  when  a  warrant  properly 
authorized  by  the  Governor  in  Council  before  the  con- 
vening of  parliament  did  not  actually  receive  His 
Excellency's  signature  until  the  day  after  Parliament 
had  met. 

Through  the  employment  of  Governor  General's 
warrants,  the  estimates  could  be  and  were  manipulated 
to  suit  the  exigencies  of  party  politics. 

I  have  collected  quite  a  number  of  cases  in  which 
Governor-General's  warrants  were  obtained  by  the  late 
Government,  and  in  which  the  obtaining  of  these  war- 
rants was  an  abuse.  We  know  perfectly  well  that  in 
1887  they  were  very  anxious  to  avoid  the  appearance 
of  any  increase  in  the  Estimates.  They  were  about  to 
go  before  the  people  and  were  anxious  to  show  that  the 

1  Mr.  McMuIlen — Can.  Hansard,  2nd  Session,  1896,  p.  799. 

67 


THE  CANADIAN  BUDGETARY  SYSTEM 

dawn  of  the  new  era  of  reduction  had  made  its  appear- 
ance, and  that  the  people  might  look  with  some  little 
hope  to  seeing  their  expenditures  decreased  in  the  future. 
What  did  we  find  these  honorable  gentlemen  then  doing? 
Why,  Mr.  Speaker,  they  kept  in  the  background  no  less 
than  sixteen  items  for  which  the  House  should  have  been 
asked  for  appropriations,  and  then,  after  the  elections 
were  over  they  secured  Governor-General's  warrants  to 
pay  these  items.  They  got  by  means  of  a  Governor- 
GeneraFs  warrant  $125,000  to  pay  the  costs  of  the 
W^indsor  and  Annapolis  Railway.  They  got  by  the  same 
means  $46,000  to  pay  for  walks  and  drives  and  bridges 
at  the  Banff  Hot  Springs.  They  got  $32,000  to  pay  for 
rebellion  losses.  Surely  these  things  were  well  known, 
and  could  have  been  provided  for  in  the  Estimates  sub- 
mitted to  the  House. ^ 

Frequently  Governor  General's  warrants  were  used 
^^  as  a  means  of  increasing  the  size  of  or  replenishing  ex- 

hausted appropriations.  Thus  in  1892,  $394,000  was 
spent  by  the  Dominion  authorities  on  the  construction 
of  two  bridges  across  the  Lachine  Canal  for  which  Par- 
liament had  only  appropriated  $170,000. 

The  vote  of  Parliament  for  $170,000  was  evaded  by 
the  device  of  a  Governor-General's  warrant,  and  while 
authority  of  Parliament  had  been  obtained  to  spend  on 
that  special  work  $170,000,  the  Government  illegally  and 
unconstitutionally  used  the  Governor-General's  warrant, 
by  which  means  they  expended  $394,000." 

The  practice  just  referred  to  has  been  severely  and 
very  properly  condemned. 

To  pretend  that  a  Government  has  the  right  to  issue 
special  warrants  to  supplement  an  exhausted  appropria- 
tion  is  in  direct  violation  of  the   principle  by  which 

^  Mr.  McMulIen — Can.  Hansard,  2nd  Session,  1896,  p.  800. 
2  Mr.  Davies — Can.  Hansard,  1895,  p.  2837. 

68 


EXPENDITURES  WITHOUT  SANCTION 

supplies  are  granted  and  admits  of  no  justification  in 
law  or  in  the  Constitution/ 

Through  this  extension  in  the  use  of  Governor 
General's  warrants  to  cases  where  expenditures  for 
ordinary  purposes  were  alone  involved,  the  administra- 
tion in  Canada  was  in  effect  enabled  to  appropriate 
money  freely  whenever  Parliament  was  not  sitting  for 
such  objects  as  it  saw  fit.  Perhaps  the  most  remarkable 
instance  of  this  occurred  in  1896.  In  that  year  the  Con- 
servative party  in  office  was  torn  by  dissensions.  As  a 
consequence  of  this,  the  expiring  Parliament  adjourned 
on  April  23rd  without  having  voted  any  appropriations 
for  the  fiscal  year  beginning  July  i.  An  election 
occurred  thereafter  which  resulted  in  a  change  of  gov- 
ernment, and  the  new  Parliament  was  summoned  to 
meet  on  July  16.  On  July  13,  Parliament  was  pro- 
rogued to  meet  on  August  13  and,  on  the  following  day, 
Sir  Wilfrid  Laurier,  the  new  Premier,  inquired  of  the 
Minister  of  Justice  whether  "a  special  warrant  can  be 
issued  to  provide  for  the  payment  of  certain  govern- 
ment employees.  In  response  to  this  inquiry,  the  Law 
Officer  of  the  Crown  gave  it  as  his  opinion  that  the  pay- 
ment of  these  employees  was  "urgently  and  immediately 
required  for  the  public  good''  within  the  meaning  of  the 
statute,  and  that  the  Governor  in  Council  might  properly 
order  a  special  warrant  to  be  prepared  to  be  signed  by 
the  Governor  General  for  the  amount  deemed  requisite. 
Pursuant  to  this  advice,  warrants  authorizing  the  ex- 
penditure of  $2,006,022  were  issued  and,  although  Par- 
liament had  failed  to  appropriate  any  funds  therefor,  the 
salaries  of  the  employees  involved  were  paid  for  two 

1  Mr.  Atwater— Quebec,  House  of  Assembly,  February  lo,  1899. 

69 


THE  CANADIAN  BUDGETARY  SYSTEM 

months.     This  action  of  the  Government  called  forth 
the  following  comment : 

What  is  the  first  precedent  which  we  are  establishing, 
if  we  do  not  call  in  question  the  conduct  of  the  govern- 
ment ?  The  precedent  is  this,  that  the  Executive  can  take 
power  to  themselves  to  expend  public  money  even  though 
Parliament  has  deliberately  refused  to  grant  this  money. 
.  .  .  The  Executive  can  sit  in  judgment  upon  the  deci- 
sions of  the  House  of  Commons  in  reference  to  the 
expenditure  of  public  money,  can  determine  that  this 
House  has  improperly  withheld  supplies  and  can  then 
vote  to  themselves  the  supplies  in  the  Council  Chamber, 
and  with  a  strong  hand,  by  means  of  Governor-Generars 
warrants,  can  take  money  which  this  House  has  refused.' 

In  another  chapter,  the  practice  of  resorting  to 
Governor  General's  warrants  will  be  referred  to  again. 
The  gravest  objection  to  them  is  contained  in  the  fol- 
lowing words  of  the  late  Sir  Richard  Cartwright : 

If  you  are  going  to  allow  the  Government  to  spend 
millions  of  the  public  money  without  the  slightest  refer- 
ence to  Parliament  in  the  fashion  I  have  now  indicated, 
1  say  there  is  an  end  to  all  proper  parliamentary  control 
over  Government  expenditure.^ 

Abuse  of  Governor  GeneraFs  Warrants  not  Con- 
siderable since  1896.  The  power  granted  to  the 
Governor  General  to  issue  special  warrants  is  one  that 
can  be  and  has  been  abused.  It  may,  therefore,  be  said 
to  constitute  a  defect  in  the  Canadian  system  of  financial 
administration.  It  is,  however,  to  be  pointed  out  that 
the  last  twenty  years  exhibit  few  abuses  of  this  authority. 
It  thus  appears  that  the  Canadians  have  appreciated  the 
evils  of  the  earlier  practice  and  now  avoid  them.     At 

1  Mr.  McNeil — Can.  Hansard,  2nd  Session,  1896,  p.  833. 

2  Quoted  in  Can.  Hansard,  2nd  Session,  1896,  p.  629. 

70 


EXPENDITURES  WITHOUT  SANCTION 

the  same  time  it  has  not  been  deemed  necessary  to  take 
away  from  the  Governor  General  the  power  in  question. 
And,  as  to  this,  it  may  indeed  be  said  that  if  it  became 
a  fixed  and  binding  tradition  that  these  warrants  shall 
not  be  issued  except  in  cases  of  real  emergency,  it  may 
be  expedient  that  their  legality  should  remain  undis- 
turbed. 

Excess  Expenditures.  For  expenditures  under 
orders  of  the  Governor  General  there  is,  as  we  have  seen, 
statutory  authority.  The  financial  accounts  of  Canada 
show,  however,  expenditures  for  which  there  is  no  legal 
warrant.  These  expenditures  occur  where  by  accident 
or  by  practical  necessity  the  expenditures  exceed  the 
amounts  specifically  voted  by  Parliament. 

The  deliberate  overriding  of  the  will  of  the  legislature 
by  the  executive  branch  was  supposedly  ended  with  the 
introduction  of  responsible  government  after  1840. 
Yet,  without  securing  the  authorization  of  Parliament, 
the  Government  of  the  United  Canadas  advanced  money 
to  the  Grand  Trunk  Railway  in  1861.  In  1862,  the 
Government  again  spent  a  large  sum  on  the  Parliament 
buildings  at  Ottawa  beyond  the  sum  appropriated  by 
Parliament  and  was  said  "to  have  become  somewhat 
careless  of  public  interests."  Such  unjustifiable  use  of 
the  public  funds  was  one  of  the  moving  causes  of  con- 
federation. 

The  misgovernment  and  mismanagement  of  the  ad-        / 
ministration  which  ruled  in  Canada  from  1855  to  1862    "r 
resulted  in  the  scheme  of  Confederation.^ 

Up  to  1864,  i^  Old  Canada,  there  had  been  abuses, 
there  had  been  expenditure  without  parliamentary  sanc- 
tion, and  the  public  mind  was  stirred  in  regard  to  these 

1  Sir  Charles  Hibbet  Tupper — Can.  Hansard,  1896,  2nd  Session,  p. 
694. 

71 


THE  CANADIAN  BUDGETARY  SYSTEM 

growing  irregularities  in  connection  with  the  expendi- 
ture of  public  money/ 

During  the  first  years  of  responsible  government, 
therefore,  the  Canadian  Parliament  failed  to  maintain 
complete  control  of  the  public  purse  strings.  For  many 
years,  now,  however,  the  deliberate  disregard  by  the 
Executive  of  legislative  directions  with  reference  to  the 
expenditure  of  public  moneys  has  not  so  often  occurred, 
and  expenditures  in  excess  of  parliamentary  grants  have 
been  for  the  most  part  due  to  oversight  or  miscalcula- 
tions unavoidable  under  any  system.  With  regard, 
however,  to  expenditures  on  public  improvements  made 
through  the  Public  Works  Department  there  is  fur- 
nished evidence  of  a  reversion  to  ante-responsible  gov- 
ernment conditions.  This  matter  of  public  works  will 
be  more  specifically  discussed  in  a  later  chapter. 

In  the  annual  reports  of  the  Auditor  General  the  ap- 
propriation accounts  contain  four  columns  under  the 
heads,  respectively,  ''Grant,"  ''Expenditure,"  "Grant 
Not  Used"  and  "Grant  Exceeded."  All  over-expendi- 
tures are  thus  set  forth  in  detail,  and  an  item  is  inserted 
in  the  next  Estimates  to  cover  the  total  amount  of  these 
excess  outlays.  Thus  in  1909,  an  appropriation  of 
$238,876  was  inserted  in  the  Estimates  "to  cover  un- 
provided items  1907-08  as  per  Auditor  General's  report." 
This  item  was  explained  by  the  Minister  of  Finance  as 
follows : 

For  very  many  years  an  item  of  this  character  has 
been  brought  forward.  It  is  a  bookkeeping  entry  which 
the  Auditor-General  desires  for  the  closing  up  of  his 
accounts.  In  some  branches  of  the  department,  it  will 
be  found  that  the  grants  have  been  greater  than  the 

1  Sir  Richard  J.  Cartwright — Can.  Hansard,  1880,  p.  545, 

7^ 


EXPENDITURES  WITHOUT  SANCTION 

expenditures,  but  in  some  other  branches  the  expenditure 
is  somewhat  greater  than  the  grant.  ...  If  the  excess 
is  large,  the  Auditor-General  will  refuse  to  pass  it,  but 
if  small  he  lets  it  pass  and  asks  that  an  indemnity  be 
given.  In  this  way  $300,000  may  seem  very  large,  but 
distributed  over  the  total  business  of  Canada,  in  a  year, 
it  is  not  excessive." 

On  another  occasion  it  was  said: 

At  the  end  of  each  fiscal  year  when  the  expenditures 
under  the  innumerable  appropriations  are  adjusted,  it 
has  always  been  found  that  here  and  there  throughout 
the  service  there  have  been  small  over-expenditures. 
These  are  all  reported  in  the  Auditor-General's  report 
as  indicated  in  the  item  above,  and  a  sum  inserted  in  the 
supplementary  estimates  at  the  next  session  to  legalize 
the  total  of  these  over-expenditures.  While  in  the  total 
appropriations  of  a  department  there  may  be  large 
amounts  unexpended,  if  there  is  any  over-expenditure 
in  a  subhead  of  the  total  vote,  such  over-expenditure  is 
reported  by  the  Auditor-General.  The  total  amount  of 
$228,664.18  is  made  up  of  amounts  from  43  cents  up- 
ward. In  large  and  varied  services  these  over-expendi- 
tures are  discovered  too  late  to  enable  a  supplementary 
estimate  to  be  made  at  the  time  the  over-expenditure  was 
discovered.^ 

Fixed  and  Controllable  Expenditures.  In  Canada 
the  custom  prevails,  both  in  the  Dominion  and  in  the 
Provinces,  of  differentiating  between  expenditures  which 
are  required  to  be  made  in  accordance  with  the  provisions 
of  previously  enacted  permanent  statutes,  and  those 
which  are  made  pursuant  to  votes  approved  by  the 
legislature  when  enacting  the  annual  supply  bills. 
These  two  classes  of  outlays  are  generally  designated 

1  Mr.  Fielding — Can.  Hansard,  1909,  p.  3466. 

2  Sir  Thomas  White— Can.  Hansard,  1916,  p.  3271. 

73 


THE  CANADIAN  BUDGETARY  SYSTEM 

as  fixed  and  controllable  expenditure  and  correspond 
respectively  to  what  in  England  are  known  as  the  Con- 
solidated Fund  and  the  Supply  Services.  In  the 
Dominion,  however,  both  classes  of  expenditures  appear 
without  differentiation  in  the  report  entitled  "Public 
Accounts"  and  in  the  reports  of  the  Auditor  General  as 
charges  upon  the  Consolidated  Fund.  In  the  "Esti- 
mates," both  in  the  summaries  and  in  the  detailed  tables, 
the  two  classes  of  items  are  stated  in  separate  columns 
headed  respectively  "Expenditures  authorized  by 
Statute"  and  "Expenditures  for  which  votes  of  Parlia- 
ment are  required." 

The  principal  items  in  the  Estimates  authorized  to  be 
paid  by  statute  are  the  interest  on  the  public  debt,  the 
subsidies  to  the  different  provinces  and  the  salaries  of 
judges  and  of  other  permanent  officials.  For  many 
years  these  fixed  expenditures  declined  in  relative  im- 
portance. Constituting  $17,597,217.27,  or  nearly  one- 
half  of  the  $36,075,445.97  of  the  main  estimates  for  the 
fiscal  year  1890-91,  they  formed  but  $31,291,657.73,  or 
barely  two-ninths  of  the  $146,786,126.42  original  esti- 
mates submitted  for  the  year  ending  March  31,  1915. 
Owing  to  Canada's  active  participation  in  the  European 
war,  however,  and  the  anticipated  triplication  of  the 
debt  of  the  Dominion,  the  tendency  is  now  the  other  way. 
For  some  years  to  come,  at  least,  the  fixed  appropriations 
will  form  an  appreciably  higher  proportion  of  the 
Dominion  government's  main  estimates  than  was  the 
case  during  the  quinquennial  period  1909-14. 


74 


CHAPTER  VI 

THE  ESTIMATES:  PREPARATION  AND 
SUBMISSION 

Preparation  of  the  Estimates.  In  accordance  with 
the  essential  principles  of  the  budgetary  system  copied 
from  Great  Britain,  every  appropriation  of  public 
moneys  by  the  Parliament  must  be  based  upon  an 
^'estimate"  and  a  recommendation  made  to  it  by  the 
Executive.  This  is  a  requirement  imposed  by  the 
British  North  American  Act  itself.  Section  54  of  that 
instrument  provides : 

It  shall  not  be  lawful  for  the  House  of  Commons  to 
adopt  or  pass  any  vote,  resolution,  address  or  bill  for  the 
appropriation  of  any  part  of  the  public  revenue  or  of  any 
tax  or  impost,  to  any  purpose  that  has  not  been  first 
recommended  to  that  House  by  message  of  the  Governor 
General  in  the  session  in  which  such  vote,  resolution, 
address  or  bill  is  proposed. 

In  the  preparation  of  the  Estimates  the  usual  neces- 
sary routine  is  followed  of  requiring  the  head  of  each 
department  to  submit  to  the  Minister  of  Finance  the 
financial  needs  for  the  coming  year  of  his  own  service, 
these  demands  being  of  course  based  in  turn  upon  the 
figures  supplied  to  him  by  the  chiefs  of  his  subordinate 
bureaus. 

In  the  English  system  it  will  be  remembered  that  the 
Treasury  sends  to  each  of  the  accounting  officers  of  the 
several  civil  services  a  circular  letter  directing  them  to 
prepare  and  transmit  the  estimates  for  the  coming  year, 
and  that  this  letter  contains  full  instructions  as  to  the 
form  in  which  these  estimates  are  to  be  drawn  up;  n< 

75 


1/ 


THE  CANADIAN  BUDGETARY  SYSTEM 

proposals  must  be  explained,  comparative  data  supplied, 
and  all  requests  justified  even  though  no  increases  are 
asked  for.  The  necessity  for  economy  is  also  em- 
phasized/ 

It  would  appear  that  in  Canada,  because  of  the  lesser 
general  financial  control  granted  to  the  Ministry  of 
Finance,  no  such  guiding  and  controlling  instructions 
are  issued.  The  standard  letter  requesting  from  the 
several  departments  their  estimates  reads  as  follows: 

Finance  Department, 
Ottawa,  Canada. 
The  Deputy  Minister, 

Ottawa. 
Sir: 

By  direction  of  the  Minister  of  Finance  I  have  the 
honour  to  request  that  you  will  be  good  enough  to  for- 
ward to  this  Department  as  soon  as  possible  the  estimates 
of  the  various  services  of  your  Department  for  the  finan- 
cial year  ending  the  31st  March,  191 8. 

I  have  also  to  request  that  you  will  furnish  at  the  same 
time  full  information  explanatory  of  the  services  pro- 
vided for,  especially  in  the  cases  of  new  or  increased 
charges. 

I  have  the  honour  to  be.  Sir, 

Your  obedient  servant. 

Deputy  Minister  of  Finance. 

The  Minister  of  Finance,  or  rather  the  Deputy,  Min- 
ister, who  is  the  active  administrative  head  of  the 
Finance  Department,  is  expected  to  scrutinize  with  care 
the  various  departmental  estimates  sent  in  to  him,  with  a 
view  to  seeing  that  they  are  reasonable  in  amount,  and 
that,  in  the  aggregate,  they  do  not  go  beyond  the  amount 

^  For  the  text  of  this  circular  letter  together  with  cotnments  thereon, 
see  the  report  by  the  Institute  for  Government  Research  on  the  "System 
of  Financial  Administration  of  Great  Britain,"  pp.  52ff. 

76 


PREPARATION  OF  ESTIMATES 

that  the  Government  deems  may  expediently  be  asked  of 
Parliament.     Where  deductions  are  considered  desirable  v 
the  matter  is  taken  up  more  or  less  informally  with  the    J 
minister  concerned  and  the  effort  made  to  obtain  his 
agreement    thereto.      The    entire    estimates    are    then 
brought  before  the  Cabinet  as  a  whole  for  approval  and  \  J 
decision  upon  points  which  have  not  been  fully  decided, 
and  when  submitted  to  the  House  of  Commons  have,  of    ^ 
course,  the  political  support  of  the  Government  as  a 
whole.     It  still  remains  true,  however,  that  the  individ- 
ual ministers  are  held  especially  responsible  for  the  esti-  j  J 
mates  appertaining  to  their  respective  departments. 

Under  responsible  government,  the  minister  cannot 
ask  a  vote  from  this  House  without  first  being  convinced 
himself  of  the  absolute  necessity  of  the  expenditure ;  then 
he  must  convince  his  colleagues  that  the  vote  should  be 
submitted  to  the  House,  and  then  he  must  have  the 
approval  of  the  Governor-General  on  the  ground  that 
the  expenditure  is  in  the  public  interest.^ 

Control  by  the  Minister  of  Finance.  In  this  ac- 
count of  the  preparation  of  the  Estimates  it  will  of  course 
be  seen  that  though  the  Minister  of  Finance  may  have 
a  certain  amount  of  personal  or  political  influence  upon 
the  other  ministers,  there  is  no  approach  to  that  system 
of  effective  Treasury  control  which  is  such  a  con- 
spicuous and  beneficent  feature  of  the  British  financial 
system.  The  Canadian  Cabinet  as  a  body  has,  as  has 
been  said,  and  must  have  under  any  true  system  of 
cabinet  government,  a  final  determination  as  to  the  esti- 
mates which  are  to  be  submitted  to  the  Parliament. 
But  this  is  a  kind  of  control  which  is  far  different  from, 
and  much  less  effective  than,  the  control  exercised  by 

^  Hon   Mr.  Haggart— Can.  Hansard,  1903,  p.  1262. 

77 


THE  CANADIAN  BUDGETARY  SYSTEM 

the  British  Treasury  which  is  not  itself,  except  in  very 
sHght  measure,  a  spending  service,  but  has  for  its 
function  the  maintenance  of  a  day-to-day  control  over 
expenditures  in  the  other  services,  and  whose  approval 
must  be  asked  before  an  estimate  can  be  included  in  the 
budget/  The  slight  degree  of  supervising  and  mod- 
erating authority  exercised  by  the  Canadian  Ministry 
of  Finance  is  shown  in  the  practice,  which  will  be 
presently  referred  to,  of  inserting  in  the  Estimates  many 
items  which  are  urged  by  private  members  of  Parlia- 
ment. 

It  is  required  by  law  in  Canada  that  *'the  Governor-in- 
Council  shall,  from  time  to  time,  determine  the  number 
of  officers,  chief  clerks,  clerks,  messengers  and  other 
employees  required  for  the  workings  of  the  several  de- 
partments in  each  division  of  the  public  service/'^  Thus 
the  ultimate  responsibility  for  any  increase  in  the  num- 
ber of  official  servants  is  placed  on  the  entire  Cabinet. 
The  procedure  to  be  followed  when  such  an  increase  is 
desired  has  thus  been  described: 

The  House  is  entitled  to  have  the  opinion  of  the  Cabi- 
net before  any  proposition  is  submitted  to  it  to  change 
the  organization  of  any  department.  We  are  entitled 
to  have  first  the  recommendation  to  the  ministers  at  the 
head  of  the  department  made  by  the  deputy  head.  That 
recommendation  ought  to  be  on  record.  Then  the  matter 
should  be  brought  before  the  Governor-in-Council  and 
considered,  and  it  is  only  on  the  approval  of  the  Gov- 
ernor-in-Council that  the  minister  at  the  head  of  the 
department  has  a  right  to  ask  Parliament  to  vote  the 
money.  This  is  not  a  mere  matter  of  form.  We  are 
entitled    to    have    the    guarantee    and    pledge    of    the 

^Appeals  from  decisions  of  the  Treasury  may  be  taken  by  the  min- 
isters concerned  to  the  Cabinet  as  a  whol«,  but  these  are  not  frequent. 
2  Civil  Service  Law,  Section  6. 

78 


PREPARATION  OF  ESTIMATES 

Governor-in-Council  that  the  necessity  exists  for  the 
change/ 

Estimates  for  Public  Works.  When  it  comes  to 
the  initiation  of  public  works,  however,  the  salutary 
principle  that  the  minister  of  the  department  must  first 
be  persuaded  of  the  desirability  of  the  proposed  im- 
provement is  not  strictly  adhered  to.  Initial  grants  for 
new  public  works  are  only  too  frequently  inserted  in  the 
Estimates  upon  the  urging  of  some  member  of  Parlia- 
ment. Formerly  requests  for  appropriations  for  pub- 
lic works  were  generally  made  by  petition. 

It  has  been  the  invariable  rule  to  allow  the  application 
to  come  from  the  people  themselves.  I  have  not  gone 
to  the  Minister  and  asked  him  to  make  an  appropriation 
simply  on  my  own  authority,  but  I  have  done  it  on  the 
strength  of  a  well-circulated  and  well-signed  petition 
from  the  people  of  the  community  interested  in  that 
work.  We  place  that  before  the  Minister  and  he  then 
sends  down  his  engineer  to  inquire  into  the  utility  of  this 
work.'' 

During  recent  years,  the  practice  has  arisen  of  insert- 
ing appropriations  of  this  character  in  the  Estimates 
merely  because  they  were  recommended  by  members  of 
the  House  of  Commons.  This  system  of  making  appro- 
priations has  been  warmly  defended  by  certain  party 
leaders. 

There  is  nothing  wrong  in  a  Minister  taking  a  state- 
ment from  a  member  of  Parliament  in  whom  he  has 
confidence  that  a  certain  work  in  his  county  is  necessary 
and  desirable  and  putting  a  moderate  appropriation  in 
the  estimates  for  that  work,  provided  that  the  Minister, 
before  he  spends  the  money,  has  a  proper  investigation 

1  Mr.  Lennox — Can  Hansard,  1903,  p.  336. 

2  Mr.  Mills— Can.  Hansard,  1898,  p.  7621. 

79 


THE  CANADIAN  BUDGETARY  SYSTEM 

made  by  his  engineer  and  satisfies  himself  that  the  work 
is  going  to  serve  a  useful  purpose/ 

What  the  inevitable  outcome  of  this  policy  must  be  has 
been  described  as  follows : 

What  is  the  basis  of  estimates  submitted  to  the  House  ? 
That  the  public  work  is  necessary,  that  it  is  known  to 
be  necessary  by  the  Minister,  who  proposes  the  plan,  that 
he  will  have  the  information,  the  plan,  what  he  proposes 
to  expend,  the  probable  cost  of  the  work,  and  the  benefit 
of  the  work  to  submit  to  the  House  to  justify  the  vote. 
Fancy  a  Chancellor  of  the  Exchequer  in  Great  Britain 
allowing  a  Minister  to  come  down  with  a  vote  in  this 
way  and  justifying  it  on  the  broad  doctrine  that  all  you 
have  to  do  in  order  to  get  the  House  to  vote  your  esti- 
mates is  to  have  a  request  from  a  member  who  represents 
the  county,  with  the  statement  of  that  member,  that  the 
work  is  one  of  necessity.  Therefore  you  are  going  to 
make  estimates  on  the  request  of  niiembers  of  Parlia- 
ment.^ 

But  if  items  are  inserted  in  the  Estimates  at  the  re- 
quest of  legislators  and  they  are  permitted  to  say  what 
expenditure  shall  be  undertaken  by  the  Public  Works 
Department,  the  w^ay  is  opened  for  the  recurrence  of  the 
very  evils  which  the  English  system  of  responsible  gov- 
ernment was  to  do  away  with.  Under  that  system,  the 
Ministry  alone  is  supposed  to  be  convinced  of  the  wis- 
dom of  any  proposed  expenditure,  and  it  was  for  that 
reason  that  the  right  to  initiate  money  votes  was  taken 
away  from  the  representatives  of  the  people.  But  while 
nominally  deprived  of  this  right,  the  Canadian  members 
of  Parliament  have,  in  the  course  of  time,  more  or  less 
regained  it  as  far  as  the  important  Public  Works  De- 
partment is  concerned,  which  affords  the.  greatest  op- 

1  Hon.  Mr.  Fielding — Can.  Hansard,  1898,  p.  7599. 

2  Mr.  Foster — Can.  Hansard,  1898,  p.  7608. 

80 


PREPARATION  OF  ESTIMATES 

portunities  for  corrupt  and  wasteful  government  ex- 
penditure. 

Cabinet  Control.  After  the  individual  ministers 
have  determined  the  extent  of  the  appropriations  re- 
quired to  carry  on  the  work  of  their  departments  for 
the  coming  twelve  months,  the  Cabinet  as  a  whole  passes 
upon  the  various  requests  submitted.  As  a  rule,  the 
demands  asked  for  are  not  granted  in  full,  but  more  or 
less  radical  reductions  take  place  before  the  Estimates 
are  deemed  to  be  in  a  sufficiently  satisfactory  shape  for 
submission  to  Parliament.  In  the  language  of  a  former 
Minister  of  Finance : 

This  was  my  practice :  I  never  allowed  the  Estimates 
to  go  out  of  Council  to  be  brought  down  to  this  House 
until  I  had  set  before  Council,  in  the  first  place,  the 
amount  for  capital  and  the  amount  for  ordinary  expendi- 
ture which  was  asked,  and  then  discussed  the  question 
with  my  colleagues  as  to  about  how  far  we  could  go. 
After  we  had  settled  that,  the  cutting  down  process  took 
place." 

Once  the  nature  of  the  Estimates  has  been  determined 
by  the  whole  Cabinet,  the  approval  of  the  Governor 
General  follows  as  a  matter  of  course.  He  would  in  no 
event  venture  to  disagree  with  the  conclusions  of  his 
responsible  advisers  regarding  the  amounts  to  be  spent 
on  the  various  government  services  so  long  as  they  com- 
manded a  majority  of  the  Lower  House. 

In  determining  the  extent  of  the  appropriations  to  be 
recommended  to  Parliament,  the  state  of  the  public 
revenue  is  naturally  taken  into  consideration.  If  pros- 
perous conditions  prevail  and  the  national  receipts  ex- 
ceed the  amount  anticipated,  liberal  appropriations  and 

1  Mr.  Foster— Can.  Hansard,  1896,  2nd  Session,  p.  2462. 

81 


THE  CANADIAN  BUDGETARY  SYSTEM 

large  supplementary  estimates  are  the  rule.  Thus,  the 
Dominion  main  estimates  for  the  fiscal  year  19 13- 14, 
when  good  times  reigned  in  Canada,  totalled  $125,- 
850,338.28  or  $8,031,856.53  more  than  all  the  appro- 
priations voted  for  1912-13.  Not  content  even  with 
this  notable  increase,  the  Government  later  had  sup- 
plementary estimates  passed  amounting  to  $17,361,- 
476.64.  On  the  other  hand,  when  a  period  of  financial 
depression  has  set  in,  a  reduction  in  the  estimates  has 
been  seen.  Thus  in  1909  Mr.  Fielding  reduced  his  esti- 
mates for  the  fiscal  year  1909-10  over  the  preceding 
year  by  $22,581,000,  of  which  nearly  $9,500,000  was  for 
ordinary  and  not  capital  expenditure. 

Should  the  anticipated  revenue  prove  insufficient 
to  defray  the  government's  expenditures  even  after  all 
reductions  in  the  estimates  have  been  made,vthe  initial 
suggestion  as  to  new  methods  of  taxation  to  cover  the 
deficit  rests  with  the  Cabinet.  But  changes  in  taxation 
are  comparatively  infrequent  in  Canada  for  the  reason 
that  most  of  the  national  and  provincial  revenues  are 
derived  from  permanent  statutes  which  do  not  have  to 
be  reenacted  annually  like  the  English  income  tax. 

When  the  requirements  of  the  various  government 
services  for  the  approaching  fiscal  year  are  under  con- 
sideration, the  estimate  finally  arrived  at  is  supposed  to 
give  the  maximum  anticipated  outlay.  No  obligation 
rests  on  the  Government,  however,  to  spend  the  sum 
asked  for. 

When  I  ask  for  a  certain  sum,  it  is  not  that  I  mean  to 
say  the  Government  intends  to  spend  the  whole,  but  that 
such  is  the  limit  within  which  the  Government  hopes  to 
keep  their  disbursements  for  the  term.^ 

1  Hon.  Christopher  Dunkin,  Financial  Statement  (Quebec)  1868, 
p.  14. 

82 


\J 


PREPARATION  OF  ESTIMATES 

Submission.  When  the  time  for  the  meeting  of 
the  Dominion  Parliament  arrives,  the  opening  of  the 
parHamentary  session  is  signalized  by  a  formal  address 
of  the  Governor  General  delivered  in  person  to  the  two 
legislative  chambers.  In  this  speech  the  condition  and 
progress  of  Canada  are  reviewed  and  any  proposed  new 
legislation  which  the  Ministry  may  have  in  contem- 
plation is  recited."  In  addition,  the  members  of  the 
House  of  Commons  are  told  that  "the  public  accounts  for 
the  last  year  and  the  Estimates  made  for  the  succeeding 
year'*  will  be  laid  before  them  without  delay. 

Pursuant  to  this  promise  the  Governor  General,  gen- 
erally within  a  short  period  after  Parliament  has  been 
convened,  transmits  to  the  House,  with  a  written  mes- 
sage, the  Estimates,  as  approved  by  the  Cabinet,  of  the  I 
sums  required  to  carry  on  the  various  public  services  for  J  l/ 
the  coming  fiscal  year,  and  expressly  recommends  them 
to  the  House.  The  same  procedure  is  followed  when 
supplementary  estimates  have  to  be  passed  to  provide 
for  services  which  have  been  either  inadvertently  over- 
looked in  the  main  estimates  or  newly  established  by 
Parliament. 

Distinction  between  General  and  Supplementary 
Estimates.  In  principle  a  fairly  clear  distinction  is 
made  between  the  Estimates  submitted  soon  after  the 
convening  of  Parliament  and  constituting  the  expendi- 
ture statement  of  the  budget  and  the  Estimates  sub- 
mitted at  a  later  date.  The  first,  known  as  Main  Esti- 
mates, or  simply  Estimates,  generally  speaking,  include 

J  "It  is  well  understood  that  the  formality  of  a  Speech  from  the 
Throne— a  formality  which,  like  many  of  our  institutions  is  derived  from 
the  Mother  Country— is  intended  to  enable  a  brief  reference  to  be  made 
to  matters  of  administration  and  to  convey  to  Parliament  an  idea  of  the 
important  measures  which  will  be  submitted  for  their  consideration." 
Mr.  Hazen — Can.  Hansard,  1891,  p.  8. 

83 


\J 


THE  CANADIAN  BUDGETARV  SYSTEM 

only  the  figures  for  services  and  governmental  activities 
already  in  operation.  The  estimates  for  distinctly  new 
undertakings  are  ordinarily  reserved  for  the  supple- 
mentary estimates  which  are  later  presented. 

It  is  not  customary  to  place  in  the  Main  Estimates 
votes  for  works  which  are  not  initiated.  The  Main 
Estimates  contain  only  votes  for  works  which  have  been 
begun,  and  that  is  the  reason  why  many  works  which 
will  find  a  place  in  the  Supplementary  Estimates  are  not 
mentioned  here.^ 

It  has  been  the  custom  of  the  Public  Works  Depart- 
ment, or  at  least  for  many  years,  to  provide  for  new 
works  in  the  Supplementary  Estimates  of  the  year.^ 

The  practice  has  been  in  the  past  to  put  in  the  Main 
Estimates  items  for  all  works  provided  for  previously 
and  not  yet  proceeded  with,  and  in  the  Supplementary 
Estimates  items  for  new  works." 

But  it  should  be  remembered  that  the  items  in  the  sup- 
plementary estimates  do  not  consist  of  votes  for  new 
public  works  alone. 

1  said  that  all  new  works  are  in  the  supplementary 
estimates,  but  that  does  not  mean  that  the  supplementary 
estimates  may  not  contain  many  items  for  other  than 
new  works.* 

1  If  any  appropriation  for  a  new  public  work  has  been 
\  once  passed  in  the  supplementary  estimates,  it  is  no 
longer  regarded  as  a  new  item  but  is  thereafter  revoted 
as  a  part  of  the  main  estimates.  Should  it  then  be 
stricken  out  for  any  reason  from  the  main  estimates  be- 
fore any  part  of  the  money  voted  has  been  actually  ex- 

^  Mr.  Tarte — Can.  Hansard,  1897,  p.  2729. 

2  Hon.  Mr.  Sutherland,  Minister  of  Public  Works — Can.  Hansard, 
1903.  P-  13029. 

3  Mr.  Pugsley — Can.  Hansard,  1911-12,  p.  2366. 

4  Hon.  Mr.  Tarte,  Minister  of  Public  Works — Can.  Hansard,  1902, 
p.  4619. 

84 


PREPARATION  OF  ESTIMATES 

pended,  any  contemplated  new  appropriation  in  aid  of 
the  proposed  improvement  must  be  again  put  through 
the  supplementary  estimates. 

In  the  former  estimates,  Nova  Scotia  had  for  harbors 
and  rivers  $1,309,166  and  in  the  present  estimates  only 
$445,075.  Therefore  the  large  sum  of  $824,066  has  dis- 
appeared from  the  estimates  of  the  Province  of  Nova 
Scotia.  I  understand  from  my  honorable  friend  that  a 
large  amount  of  that  money  is  to  be  replaced  in  the  sup- 
plementary estimates ;  but  why  he  should  go  through  the 
form  of  striking  them  out  of  the  estimates  and  putting 
them  back  a  few  weeks  later  has  puzzled  me.^ 

Thus,  in  the  Canadian  budget  practice,  the  supple- 
mentary estimates  are  not  limited  simply  to  making  pro- 
vision for  unforeseen  expenditures.  The  objection  to 
making  such  a  use  of  supplementary  estimates  will  be 
discussed  later  on.^  Apparently  the  enlargement  in 
their  scope  arose  from  a  desire  to  facilitate  the  making 
of  comparisons.  By  placing  all  items  for  new  public 
improvements  in  the  supplementary  estimates,  and  by 
having  the  main  estimates  contain  only  appropriations  A 
for  current  governmental  purposes,  it  was  thought  that  '; 
the  extent  to  which  the  party  in  power  was  conducting 
the  affairs  of  the  Dominion  economically  or  extrava- 
gantly could  be  better  determined.  At  least,  no  better 
explanation  suggests  itself  for  the  original  inclusion 
within  the  Canadian  supplementary  estimates  of  items 
of  new  expenditure  for  public  works,  which  could  have 
been  readily  prepared  in  advance  and  in  time  to  be  in- 
serted in  the  main  estimates. 

In  presenting  supplementary  estimates  a  distinction, 
however,  is  made  between  those  having  for  their  purpose 

^  Mr.  Sinclair — Can.  Hansard,  1911-12,  p.  2437. 
-  See  p.  260. 

85 


THE  CANADIAN  BUDGETARY  SYSTEM 

the  supplementing  of  appropriations  for  the  current  year 
and  those  relating  to  the  year  to  come.  Those  of  the 
first  character  are  suggested  and  submitted  as  a  separate 
estimate.  None  thus  correspond  to  what  are  known  as 
deficiency  estimates  in  the  United  States.  It  is  unfor- 
tunate that  they  are  not  so  styled  in  order  that  the  dis- 
tinction between  them  and  supplementary  estimates 
proper  might  be  more  clearly  maintained. 

Form  of  the  Estimates.  The  general  Estimates 
ordinarily  form  an  octavo  volume  of  approximately  one 
hundred  printed  pages.  The  first  table  presented  is  a 
general  summary  of  the  total  estimates  classified  by 
main  services  of  the  government.  For  each  service 
there  is  shown  the  amount  to  be  voted  for  the  year  to 
be  financed,  the  amount  already  provided  for  by  statute, 
the  total  of  these  two  amounts,  the  corresponding  total 
for  the  year  in  progress,  and  the  increase  or  decrease  of 
the  former  in  comparison  with  the  latter.  The  follow- 
ing table  taken  from  the  Estimates  for  1918  shows  the 
character  of  information  given  by  this  summary. 


86 


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88 


PREPARATION  OF  ESTIMATES 

From  this  summary  it  will  be  seen  that  the  estimates 
of  expenditure  from  the  Consolidated  Fund  are  grouped 
under  forty-three  heads.  With  a  few  exceptions,  these 
heads  represent  distinct  services  of  the  government,  / 
each  conducted  by  a  separate  bureau,  or,  in  not  a  few 
cases,  by  a  separate  department.  The  estimates  of  the 
cost  of  the  offices  of  those  bureaus  or  departments  at 
Ottawa  are,  however,  gathered  together  under  the  single 
head  "Civil  Government.*' 

Following  this  summary  are  given,  in  the  same  order 
of  services,  the  estimates  proper  arranged  under  appro- 
priation heads  or  "votes'*  as  they  are  technically  called. 
In  each  case  the  estimates  for  the  preceding  year  are 
given  and  the  increase  or  decrease  shown.  Under  each 
service  is  also  given  a  table  showing  the  items  of  ex- 
penditure already  authorized  by  statute. 

For  illustrative  purposes  there  are  reproduced  here- 
with the  "votes"  for  the  service  "Civil  Government"  in 
the  Estimates  for  1917-18. 


89 


III.—CIVIL   GOVERNMENT 

Amount  to  be  voted $7,224,561.00 


Departments. 


lon-is. 


1916-17. 


Compared  with 
Estimates  of  1916-17. 


Increase. 


Decrease. 


(A)  Estimates  of  expendi- 
ture FOR  WHICH  Votes 
OF  Parliament  are 
Required. 

Governor     General's     Secre- 
tary's Office — 

Salaries 

Contingencies,  including  al- 
lowance of  $600  to  Pri 

vate  Secretary 

Privy  Council  Office — 

Salaries 

Contingencies 

Administration  of  Justice — 

Salaries,  including  J.  P.  Bill 
at  $4,000,  and  Miss  G 
Avery,  promoted  to  Sec 
ond  Division,  Subdivi- 
sion B,  at $1,200 

Contingencies 

Department   of    Militia   and 

Defence — 

Salaries,  including  H.  M. 
Garrison  at  $1,850 

Contingencies 

Department  of  the  Secretary 

of  State- 
Salaries  including  P.  T.  Kir- 
wan,  promoted  to  First 
Division,  Subdivision  B; 
J.  F.  Champagne,  pro- 
moted to  Second  Division 
Subdivision  A;  M.  J. 
Birdwhistle,  promoted  to 
Second  Division,  Subdivi- 
sion B  at  $1.200 

Contingencies 

Department  of  Public  Print- 
ing and  Stationery — 

Salaries 

Contingencies 

Department  of  the  Interior — 

Salaries 

Contingencies 

DepartmentoflndianAffairs — 

Salaries 

Contingencies 

Royal    Northwest    Mounted 

Police — 

Salaries 

Contingencies 

Office  of  the  Auditor  General — 

Salaries,  including  Assistant 
Auditor  General  at  $4,500 

Contingencies 

Department  of  Finance  and 

Treasury  Board — 

Salaries,  including  Assistant 
Deputy  Minister  at 
$4,500;  Comptroller  of 
Dominion  Currency  at 
$4,500;  Accountant  of 
Contingencies  at  $3,000 
Commissioner  of  Taxa- 
tion at  $5,000;  Assistant 
Commissioner  of  Taxa- 
tion at  $3,500 

Contingencies 


(a) 


(ft) 


(c) 


(d) 


(e) 


if) 


(«) 


W 


(»■) 


(;) 


(k) 


cts. 


26,250  00 


66,600  00 


49,412  SO 
10,000  00 


154,437  50 
21,000  00 


187,700  00 
19.500  00 


76.737  50 
16,000  00 


65,762  50 
10,300  00 


,191.255  00 
115,000  00 


126,862  50 
21.550  00 


21,712  50 
1,700  00 


143,850  00 
16,500  00 


151,512  50 
30,000  00 


25,600  00 


66,900  00 


47,962  50 
10,000  00 


150,224  37 
21,000  00 


182.800  00 
19.500  00 


77,412  50 
16,000  00 


70,662  SO 
10.300  00 

1,171,655  00 
120,000  00 

125,700  00 
21,550  00 


20,650  00 
1 , 700  00 


138,350  00 
16,500  00 


138,125  00 
28,000  00 


650  00 


300  00 


1.450  00 


4,213  13 


4.900  00 


19,600  00 


675  00 


4.900  00 


5,000  00 


1,162  50 


,062  SO 


5,500  00 


13,387  50 
2,000  00 


90 


Departments. 


(A)  Estimates  of  expendi- 
ture FOR  WHICH  Votes 
OF  Parliament  ark 
Required. 

Department  of  Customs — 

Salaries 

Contingencies 

Department  of  Inland  Reve- 
nue— 

Salaries 

Contingencies 

Department  of  Agriculture — 

Salaries 

Contingencies 

Department  of   Marine,  and 

Fisheries — 

Salaries,  including  A.  R. 
Tibbits,  transferred  from 
the  outside  service  at 
$2,800 

Contingencies 

Department    of    Naval    Ser- 
vice— 

Salaries 

Contingencies 

Department  of  Railways  and 

Canals — 

Salaries,  including  Assistant 
to  Minister  at  $4,500;  F. 
M.  Maclennan  at  $1,800; 
R.  H.Lang  at  $1.800.... 

Contingencies 

Department  of  Public  Works- 
Salaries 

Contingencies 

Department  of  Mines — 

Salaries 

Contingencies 

Post  Office  Department — 

Salaries 

Contingencies 

Department    of    Trade    and 

Commerce — 

Salaries 

Contingencies 

Department  of  Labour — 

Salaries 

Contingencies 

High    Commissioner's    Office 

London — 

Salaries 

Contingencies 

Departments  Generally — 

Contingencies — Care  and 
cleaning  of  Departmental 
Buildings,  including 
amount  of  $100  to  E. 
Snowdon  for  firing  noon 

gun 

General  Consulting  Engineer 

to  Dominion  Government 

Salaries 

Contingencies 

Department  of  Insurance — 

Salaries 

Contingencies 

Department  of  External  Af- 
fairs— 

Salaries , 

Contingencies 


(y) 

(z) 


1917-18. 


328,100  00 
25,000  00 


180,412  50 
22,000  00 

490,675  00 
100,000  00 


207,950  00 
32,000  00 


188.950  00 
50.000  00 


182,987  50 
28,000  00 


590,250  00 
85,000  00 


381,985  00 
5,500  00 


842,820  00 
125,000  00 


133,700  00 
15.000  00 


54,137  50 
15,000  00 


21,650  00 
58,151  00 


275,000  GO 


7,600  00 
150  00 

30,737  50 
26,000  00 


34,512  50 
15.500  00 


1916-17. 


328,237  SO 
20.000  00 


173,250  00 
20,000  00 


470,612  50 
100,000  00 


217.000  00 
46,000  00 


180,950  00 
50,000  00 


175,712  50 
28,000  00 


579,510  00 
85,000  00 


368,312  50 
7,000  00 


819,370  00 
125,000  00 


131,912  50 
15,000  00 

54.012  50 
15,000  00 


20,550  00 
36,676  00 


220,000  00 


7,600  00 
150  00 

29,162  50 
25,500  00 


31,450  00 
9.500  00 


Compared  with 
Estimates  of  1916-17. 


Increase. 


5.000  00 


7,162  50 
2,000  00 


20,062  50 


8,000  00 

7,275  00 
10,740  00 
13.672  50 
23,450  00 

1,787  50 
125  00 


1 , 100  00 
21,475  00 


55,000  GO 


1,575  00 
500  00 


3,062  50 
6.000  00 


Decrease, 
I 


cts. 


137  50 


9,050  00 
14,000  00 


1,500  00 


91 


Hi 

15 


Departmente. 


1917-18. 


1916-17. 


Compared  with 
Eetimatesof  1916-17. 


Increaec. 


Decrease. 


{A)  Estimates  of  bxpendi 

TURK  FOR  WHICH  VOTB« 

OF  Parliament  are 
Required. 

Office    of    the    Conservation 
Commission — 
Salaries 

Department    of    Public    Ar- 
chives— 

Salaries 

Contingencies 

Civil  Service  Commission- 
Salaries 

Contingencies 


(J5)  Expenditure  Author- 
ized BY  Statute 

Salary  of  the  Governor  General 
Salary  of  the  High  Commis 

sioner  of  Canada  in  England 
Salary  of  the  Lieut.-Governor 

of  Ontario 

Salary  of  the  Lieut.-Governor 

of  Quebec 

Salary  of  the  Lieut.-Governor 

of  Nova  Scotia 

Salary  of  the  Lieut.-Governor 

of  New  Brunswick 

Salary  of  the  Lieut.-Governor 

of  Manitoba 

Salary  of  the  Lieut.-Governor 

of  British  Columbia. . . . 
Salary  of  the  Lieut.-Governor 

of  Prince  Edward  Island 
Salary  of  the  Lieut.-Governor 

of  Alberta 

Salary  of  the  Lieut.-Governor 

of  Saskatchewan 

Salary  of  Fifteen  Miniisters 

at  $12,000,  14  at  $7,000.. 
Salary  of  the  Solicitor  General 
Salary  of  the  Governor-Gen- 
eral's Secretary , 

Salary  of  the  Auditor  General 
Salary  of  the  Superintendent 

of  Insurance 


SUMMARY 


To  be  voted 

Authorized  by  Statute. 

Total 


(w) 
(arf) 


ct«. 


37,650  00 


53,425  00 
7,500  00 

33,075  00 
15,500  00 


36.100  00 


52,925  00 
7,500  00 

32.587  50 
15,500  00 


1,550  00 
500  00 
487  50 


7,224,561  00 


48,666  66 

10.000  00 

10.000  00 

10.000  00 

9.000  00 

9,000  00 

9.000  00 

9,000  00 

7,000  00 

9,000  00 

9,000  00 

110,000  00 
5,000  00 

2,400  00 
5,000  00 

5,000  00 


7,015,672  87 


48.666  66 

10,000  00 

10.000  00 

10.000  00 

9,000  00 

9.000  00 

9.000  00 

9,000  00 

7.000  00 

9.000  00 

9,000  00 

110.000  00 
5.000  00 

2.400  00 
5,000  00 

5,000  00 


2CJ8,888  13 


267,066  66 


267.066  66 


7,224,561  00 
267.066  66 


7.015,672  87 
267.066  66 


208.888  13 


7,491.627  66 


7,282,739  S3 


208.888  13 


92 


PREPARATION  OF  ESTIMATES 

It  is  the  aggregate  of  the  several  tables  of  ^'estimates 
of  cxponditure  for  which  votes  of  Parliament  are  re- 
quired," similar  to  the  foregoing,  which  alone  forms  the 
subject  of  action  by  Parliament.  Detailed  explanations 
of  the  items  entering  into  the  several  totals  may  be,  and 
indeed  in  the  case  of  many  of  the  totals  always  are,  pre- 
sented to  Parliament  for  its  information,  but  its  action 
is  by  practice  confined  merely  to  allowing  or  reducing 
the  total  amounts  listed  in  the  tables  of  votes.  It  is  these 
tables  alone  that,  with  the  reductions  in  amounts  de- 
termined on  by  Parliament,  are  included  in  the  appro- 
priation act.  It  need  hardly  be  pointed  out,  therefore- 
that  the  degree  of  itemization  embodied  in  these  tables  of  . 
votes  is  of  the  utmost  importance  in  exhibiting  the  degree  \  i/^ 
of  control  which  is  exercised  by  Parliament  over  the 
allotment  of  funds  by  the  Executive. 

In  examining  these  tables  it  should  be  borne  in  mind 
that  only  the  total  amount  granted  under  each  *Vote'*  is 
binding  on  the  executive,  regardless  of  the  distribution 
of  that  amount  among  the  several  items  which  may  be 
listed  under  the  *Vote."  Thus,  in  the  table  of  votes 
under  the  head  of  "Civil  Government,**  just  presented,  it 
will  be  seen  that  while  the  numbered  "votes"  total  only 
thirty,  each  numbered  "vote"  is  divided  under  the  two 
heads  of  "Salaries"  and  "Contingencies,"  and  this  two- 
fold division  of  each  "vote"  is  the  standing  practice  for 
the  estimates  of  the  regular  administrative  departments. 
Certain  of  the  votes,  moreover,  are  divided  into  a  much 
greater  number  of  subheads,  the  number  in  some  cases, 
as  in  Vote  No.  128,  for  Harbors  and  Rivers,  Quebec, 
running  as  high  as  thirty-nine,  the  amount  allowed  for 
each  improvement  being  separately  listed. 

Of  late  years,  the  tendency  has  apparently  been  in  the 

93 


THE  CANADIAN  BUDGETARY  SYSTEM 

direction  of  a  reduction  in  the  number  of  "votes''  and 
subdivisions  of  votes  presented  and  a  corresponding  in- 
crease in  the  number  of  requests  for  lump  sums.  That 
this  tendency  has  not  escaped  objection  as  making  a 
strict  parliamentary  control  of  government  disburse- 
ments more  difficult  is  evidenced  by  the  following  out- 
burst of  indignation : 

This  is  a  most  outrageous  way  of  bringing  down  Esti- 
mates, Here  you  have  a  lump  sum  of  $700,000.  .  .  .. 
This  sum  of  money  can  be  spent  as  the  Minister  chooses; 
Parliament  has  no  chance  to  arrange  it  or  limit  it.  These 
sums  should  be  voted  by  Parliament  so  that  they  cannot 
be  juggled  with — they  cannot  be  changed  in  the  depart- 
ment. As  it  is,  this  is  the  blindest  kind  of  way  of  making 
estimates.^ 

As  already  stated,  there  is  presented,  in  connection 
with  some  of  the  "votes,"  supporting  schedules  setting 
forth  in  great  detail  the  items  making  up  the  estimated 
total.  Particularly  is  this  true  of  votes  calling  for  large 
sums  for  "Salaries"  in  the  administrative  departments. 
But  it  should  be  kept  clearly  in  mind  that  this  detailed 
itemization  is  intended  solely  for  the  information  of 
Parliament,  is  not  acted  upon  by  it,  and  does  not  appear 
in  the  appropriation  act.  Once  the  total  listed  in  the 
table  of  votes  is  granted  by  Parliament,  the  Executive  is 
free  to  allot  that  total  in  any  manner  deemed  best,  with- 
out being  bound  in  the  slightest  degree  by  the  itemization 
appearing  in  the  supporting  schedules  of  the  Estimates. 

The  following  detailed  schedule,  supporting  the  esti- 
mate for  Vote  No.  8,  Department  of  the  Interior,  in  the 
table  of  votes  under. "Civil  Government,"  just  presented, 
is  typical  of  the  degree  and  form  of  itemization  presented 

1  Mr.  Foster — Can.  Hansard,  1908-09,  p.  7016. 

94 


Number  of 
Employees 


1917-18    1916-17 


(g)  Department  of  the  Interior 


Salaries 


1917-18 


1916-17 


61 


116 


61 


116 


249 


249 


189 


190 


189 


190 


Deputy  Minister 

First  Division,  Subdivision  A: — 

6  at  $4,000;  1  at  $3,975;  2  at  $3,750;  2  at 
$3,675;  5  at  $3,400;  1  at  $3,300;  2  at 
$3,200;  2  at  $3,100;  1  at  $3,050;  1  at 
$2.850 

First  Division,  Subdivision  B: — 

30  at  $2,800;  3  at  $2,700;  1  at  $2,675;  1  at 
$2,650;  2  at  $2,600;  9  at  $2,500;  9  at 
$2,400;  1  at  $2,350;  1  at  $2,325;  1  at 
$2,275;  1  at  $2,250;  1  at  $2,225;  1  at 
$2.200 

Second  Division.  Subdivision  A: — 

29  at  $2,100;  1  at  $2,075;  2  at  $2,000;  1  at 
$1,975;  1  at  $1,962.50;  2  at  $1,950;  1  at 
$1,937.50;  9  at  $1,900;  4  at  $1,887.50 

1  at  $1,875;  11  at  $1,850;  2  at 
$1,837.50;  1  at  $1,825;  2  at  $1,812.50; 
16  at  $1,800;  21  at  $1,750;  3  at  $1,700 

2  at  $1,687.50;  3  at  $1,675;  1  at 
$1,662.50;  1  at  $1,650;  1  at  $1,637.50; 
1  at  $1.625 

Second  Division.  Subdivision  B: — 

33  at  $1,600;  13  at  $1,575;  1  at  $1,537.50; 

5  at  $1,525;  1  at  $1,500;  1  at  $1,487.50; 
31at$1.475:lat$1.450;lat$1.437.50;7 
at$1.425;2at$l,412.50;8at$1.400;4at 
$1.387.50; 33  at $1,375;  lat$1.362.50; 

6  at  $1,350;  4  at  $1,337.50;  15  at 
$1,325;  2  at  $1,312.50;!  at  $1,305;  5  at 
$1,300;  lat$1.287.50;5at$1.275;2at 
$1,262.50;  1  at  $1,250;  1  at  $1,237.50; 
1  at $1,225;  3  at  $1,200;  2  at  $1,187.50 

1  at  $1. 175;  4at  $1,137.50;  3  at  $1,125 

2  at  $1,112.50;  4  at  $1,100;  5  at 
$1,087.50;  1  at  $1,075;  1  at  $1,062.50; 

1  at  $1,050;  2  at  $1,037.50;  2  at  $1,025; 

7  at  $1,012.50;  2  at  $987.50;  3  at 
$962.50;  2  at  $950;  4  at  $937.50;  1  at 
$925;  1  at  $912.50;  2  at  $887.50;  2  at 
$875;  2  at  $862.50;  3  at  $850;  1  at 
$837.50;  2  at  $825 

Third  Division.  Subdivision  A: — 

91  at  $1,200;  1  at  $1,175;  8  at  $1,150;  1  at 
$1,137.50;  4  at  $1,125;  34  at  $1,100; 

2  at  $1,087.50;  1  at  $1,075;  2  at 
$1,062.50;  26  at  $1,050;  1  at  $1,037.50; 
3at$1.025;2at$1.012.50;lat$1.000 
1  at  $987.50;  1  at  $975;  2  at  $962.50; 
1  at  $937.50;  2  at  $925;  5  at  $912.50 

Third  Division.  Subdivision  B: — 

50  at  $800;  10  at  $787.50;  2  at  $775;  7  at 
$762.50;  2  at  $750;  5  at  $737.50;  6  at 
$725;  6  at  $712.50;  2  at  $700;  15  at 
$687.50;  3  at  $675;  5  at  $662.50;  3  at 
$650;  20  at  $637.50;  21  at  $625;  3  at 
$612.50;  2  at  $600;  2  at  $587.50;  4  at 
$562.50;  7  at  $550;  2  at  $537.50;  3  at 
$525;  1  at  $512.50;  9  at  $500 

Messengers,  sorters  and  packers: — 

23  at  $800;  1  at  $787.50;  2  at  $750;  1  at 
$737.50;  5  at  $725;  2  at  $712.50;  2  at 
$700;  6  at-$687.50;  1  at  $662.50;  11  at 
$650;  2  at  $637.50;  1  at  $6250  2  at 
$612.50;  4  at  $600;  1  at  $575;  1  at 
$562.50;  1  at  $537.50;  2  at  $525 

Allowance  for  Private  Secretary 


897 


897 


Contingencies 

Clerical  assistance 

Printing  and  stationery . . . . 

Travelling  expenses  and  sundries 


$  CtB. 

5.000  00 


81,625  00 


160,350  00 


$         cts. 
5.000  00 


81,175  00 


157.850  00 


218,375  00 


215,687  SO 


332.155  00 


213.662  50 


131,425  00 


48,062  SO 
600  00 


1,191,255  00 


20,000  00 
45,000  00 
50.000  00 


115.000  00 


326.542  SO 


209,650  00 


128.812  SO 


46,3ST  SO 
600  00 


1,171,655  00 


20.000  00 
45,000  00 
55,000  00 


120.000  00 


THE  CANADIAN  BUDGETARY  SYSTEM 

in  support  of  estimates  for  the  administrative  depart- 
ments. 

With  reference  to  the  foregoing  table,  it  may  be  sug- 
gested that  if  the  enumeration  of  the  number  of  clerks 
at  the  different  rates  of  salaries  were  given  in  columnar 
form  instead  of  being  printed  solid,  not  only  would  a 
clearer  showing  be  made  of  the  personnel  of  each  serv- 
ice, but  the  changes  proposed  in  such  personnel  would 
be  more  effectively  exhibited.  Doubtless  such  a  criti- 
cism would,  however,  have  more  force  were  this 
itemization  intended  to  be  legally  controlling  upon  the 
Executive,  instead  of  being  presented,  as  already  stated, 
only  for  purposes  of  general  information. 

The  slight  degree  of  itemization  presented  in  support 
of  the  estimates  for  "Contingencies"  is  striking,  for  that 
term  is  used  in  a  sense  widely  different  from  that  at- 
/  tached  to  it  in  American  budgetary  practice,  namely,  to 
^  include  all  types  of  services  and  supplies — in  fact,  every- 
thing except  regular  salaries. 


96 


1 


CHAPTER  VII 

THE  ESTIMATES:  ACTION  UPON  IN 
PARLIAMENT^ 

Money  Bills  Originate  in  the  Commons.     Section  ^-^ 
53  of  the  British  North  America  Act  provides  that  "Bills 
for  appropriating  any  part  of  the  public  revenue,  or  for 
imposing  any  tax  or  impost  shall  originate  in  the  House 
of  Commons." 

In  pursuance  of  this  requirement  and  in  order  that 
precipitate  action  may  be  prevented,  a  standing  order  of 
the  House  of  Commons  provides  that : 

All  aids  and  supplies  granted  to  his  Majesty  by  the 
ParHament  of  Canada  are  the  sole  gift  of  the  House 
of  Commons,  and  all  bills  for  granting  such  aids  and 
supplies  ought  to  begin  v^ith  the  House,  as  it  is  the 
undoubted  right  of  the  House  to  direct,  limit,  and 
appoint  in  all  such  bills,  the  ends,  purposes,  consider- 
ations, conditions,  limitations  and  quaHfications  of 
such  grants  which  are  not  alterable  by  the  Senate. 

The  estabHshed  attitude  of  the  Senate  towards  revenue 
or  appropriation  bills  is  stated  by  Bourinot  as  follows  :^ 

Since  1870,  no  attempt  has  been  made  in  the  Senate 
to  throw  out  a  tax  or  money  bill.  The  principle 
appears  to  be  acknowledged  on  all  sides,  that  the 
upper  chamber  has  no  right  to  make  any  material 
amendment  in  such  a  bill,  but  should  confine  itself  to 
mere  verbal  or  literal  corrections.  Without  abandon- 
ing their  abstract  claim  to  reject  a  money  or  tax  bill 
when    they    feci    they    are    warranted    by    the    public 

^  In  the  preparation  of  this  chapter  the  greatest  assistance  has  been 
obtained  from  the  able  work  of  Bourinot,  Parliamentary  Procedure  and 
Practice  in  the  Dominion  of  Canada,  4th  ed.,  1916.  In  a  number  of 
paragraphs  the  author  has  simply  summarized  Mr.  Bourinot's  presen- 
tation. 

2  Bourinot,  p.  285. 

97 


^ 


THE  CANADIAN  BUDGETARY  SYSTEM 

necessities  in  resorting  to  so  extreme  a  measure,  the 
Senate  is  now  practically  guided  by  the  same  prin- 
ciple which  obtains  with  the  House  of  Lords  and 
acquiesces  in  all  those  measures  of  taxation  and 
supply  which  the  majority  in  the  House  of  Commons 
have  sent  up  for  their  assent  as  a  coordinate  branch 
of  the  legislature.  The  Commons,  on  the  other  hand, 
acknowledge  the  constitutional  right  of  the  Senate  to 
be  consulted  on  all  matters  of  public  policy. 

The  Senate  doubtless  aims  to  keep  closely  within 
its  constitutional  functions.  That  house  has  declined 
to  appoint  a  committee  to  examine  and  report  on  the 
public  accounts,  on  the  ground  that  while  the  Senate 
could  properly  appoint  a  committee  for  a  specific 
purpose — that  is,  to  inquire  into  particular  items  of 
expenditure — they  could  not  nominate  a  committee, 
like  that  of  the  Commons,  to  deal  with  the  general 
accounts  and  expenditures  of  the  dominion — a  sub- 
ject peculiarly  within  the  jurisdiction  of  the  lower 
House.  It  is  legitimate,  however,  for  the  Senate  to 
institute  inquiries,  by  their  own  committees,  into  cer- 
tain matters  or  questions  which  involve  the  expendi- 
ture of  public  money.  But  the  committee  should  not 
report  recommending  the  payment  of  a  specific  sum 
of  money,  but  should  confine  themselves  to  a  general 
expression  of  opinion  on  the  subject  referred  to  them. 

Tacking.  The  Senate  has  a  standing  rule  which 
declares  that  "to  annex  any  clause  to  a  bill  of  aid  or 
supply,  the  matter  of  which  is  foreign  to  and  different 
from  the  matter  of  the  bill,  is  unparliamentary."  And 
Bourinot  is  authority  for  the  statement  that  no  modern 
example  of  its  infringement  has  occurred.^ 

"^     Appropriations   must   be    Recommended    by    the 
Executive.     In  strict  conformity  with  the  English 

1  Bourinot,  p.  290, 

98 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

parliamentary  principles,  the  Canadian  rule  is  that  no 
measure  authorizing  the  expenditure  of  public  moneys 
shall  be  considered  except  such  as  have  been  recom- 
mended to  the  legislature  by  the  Executive.  It  is,  in- 
deed, provided  in  the  British  North  America  Act  itself 
that : 

It  shall  not  be  lav^ful  for  the  House  of  Commons 
to  adopt  or  pass  any  vote,  resolution,  address,  or  bill 
for  the  appropriation  of  any  part  of  the  public  reve- 
nue, or  of  any  tax  or  impost,  to  any  purpose  that  has 
not  been  first  recommended  by  a  message  of  the 
Governor-General  in  the  session  in  v^hich  such  vote, 
resolution,  address  or  bill  is  proposed/ 

It  will  be  observed  that  this  provision  does  not  go  quite 
as  far  as  does  the  standing  order  of  the  British  House 
of  Commons  which  declares  that  no  petition  shall  be 
received  for  any  sum  relating  to  the  public  service. 
Bourinot  is,  however,  authority  for  the  statement  that, 
under  decisions  of  its  speakers,  this  prohibition  is  in- 
variably applied  in  the  Canadian  House.^  Bourinot 
continues : 

The  constitutional  provision  which  regulates  the 
procedure  of  the  Canadian  Commons  in  this  respect 
applies  not  only  to  motions  directly  proposing  a  grant 
of  public  money,  but  also  to  those  which  involve  a 
grant,  such  as  loans  and  guarantees.  A  member  who 
has  not  received  the  permission  of  the  Crown  has  not 
been  allowed  to  move  the  House  into  committee  on  a 
resolution  providing  for  the  purchase  and  exportation  by 
the  government  of  certain  depreciated  silver  coinage. 
In  1871  it  was  proposed  to  go  into  committee  on  an 
address  to  the  Queen  for  a  change  in  the  Union  Act, 

1  Section  54.  This  provision  is  copied  from  a  clause  in  the  Act  of 
1840. 

2  Bourinot,  p.  406. 

99      .  -  ,i 


THE  CANADIAN  BUDGETARY  SYSTEM 

so  as  to  assign  the  debt  of  old  Canada  to  the  Domin- 
ion entirely,  and  to  compensate  Nova  Scotia  and  New 
Brunswick  in  connection  therewith.  The  Speaker 
expressed  an  opinion  adverse  to  the  proposal  on  the 
ground  that  it  was  intended  as  preliminary  to  legis- 
lation imposing  a  public  burden,  and  was,  conse- 
quently, not  a  mere  abstract  resolution  which  did  not 
necessarily  involve  a  future  grant. 

In  further  restraint  of  the  right  of  initiation  upon  the 
part  of  private  members  with  reference  to  financial 
measures  is  the  standing  order  of  the  Canadian  House 
which  provides  that: 

If  any  motion  be  made  in  the  House  for  any  public 
aid  or  charge  upon  the  people,  the  consideration  and 
debate  thereof  may  not  be  presently  entered  upon, 
but  shall  be  adjourned  until  such  further  day  as  the 
House  shall  think  fit  to  appoint;  and  then  it  shall  be 
referred  to  a  committee  of  the  whole  House,  before 
any  resolution  or  vote  of  the  House  do  pass  thereon. 
This  rule  is  strictly  observed.^ 

The  following  statement  of  Bourinot's  perhaps  deserves 
notice.     He  says : 

A  practice  has  grown  up  in  the  House  of  allowing 
the  introduction  of  resolutions  by  private  members, 
when  they  do  not  directly  involve  the  expenditure  of 
public  money,  but  simply  express  an  abstract  opinion 
on  a  matter  which  may  necessitate  a  future  grant. 
As  this  is  a  question  not  always  understood,  it  may 
be  explained  that  such  resolutions,  being  framed  in 
general  terms,  do  not  bind  the  House  to  future  legis- 
lation on  the  subject,  and  are  merely  intended  to  point 
out  to  the  government  the  importance  and  necessity 

J  Bourinot,  p.  408.  This  rule  Bourinot  observes  is  substantially 
similar  to  the  English  rule.  The  English  rule,  however,  is  more  definite 
in  that  it  adds  the  words,  "or  charge  upon  the  public  revenue,  whether 
payable  out  of  the  consolidated  fund  or  out  of  moneys  to  be  provided  by 
Parliament." 

100 


PARLIAMENTARY  ACTION  UPON  ESTIMAJ^:?. 

of  such  expenditure.  Referring  to  this  Vight  of  mem- 
bers to  move  such  abstract  resolutions  all  authorities 
agree  that  it  is  one  "which  the  House  exercises  and 
should  always  exercise  with  great  reserve,  and  only 
under  peculiar  and  exceptional  circumstances/'  Such 
resolutions  are  considered  virtually  ''an  evasion  of 
the  rules  of  the  House,  and  are  on  that  account  objec- 
tionable, and  should  be  discouraged  as  much  as  pos- 
sible." Nevertheless,  neither  the  English  nor  Canadian 
Plouse  of  Commons  has  ever  agreed  to  the  adoption 
of  a  rule  to  fetter  their  discretion  in  regard  to  the 
entertaining  of  such  propositions.^ 

Senate  Amendments.  The  spirit  of  this  rule  would 
prevent  amendments  in  the  Senate  of  bills  sent  to  it  by 
the  House,  where  the  effect  is  to  make  new  or  increased 
demands  upon  the  public  purse.  However,  upon  occa- 
sions, in  order  not  to  prevent,  late  in  the  session,  the  en- , 
actment  of  useful  measures,  the  House  has  accepted/ 
Senate  amendments  which  only  incidentally  necessitate 
a  charge  upon  the  people.  Furthermore,  with  reference 
specifically  to  measures  imposing  pecuniary  penalties  the 
House  has  a  rule  which  reads  as  follows : 

The  House  will  not  insist  on  the  principle  claimed 
and  exercised  by  them  of  laying  aside  bills  sent  from 
the  Senate  because  they  impose  pecuniary  penalties; 
nor  of  laying  aside  amendments  made  by  the  Senate 
because  they  introduce  into  or  alter  pecuniary  penal- 
ties in  bills  sent  to  them  by  this  House,  provided  that 
all  such  penalties  thereby  imposed  are  only  to  punish 
or  prevent  crimes  and  offences,  and  do  not  tend  to 
lay  a  burden  on  the  subject,  either  as  aid  or  supply 
to  Her  Majesty,  or  for  any  general  or  special  purpose 
by  votes,  tolls,  assessments,  or  otherwise. 

*  Bourinot,  p.  411- 

lOI 


'f 


THE  GAlS^\DlAN  BUDGETARY  SYSTEM 

It  is  still  further  to  be  observed  that,  as  a  matter  of 
convenience,   bills   with   regard   to   matters   which,   if 
i  executed,  will  require  the  expenditure  of  public  money 

\      I   are  not  infrequently  introduced  in  the  Senate  and  have 
I    indeed  money  clauses  in  them  when  introduced.     These 
clauses  are,  however,  left  out  when  the  bills  are  sent  to 
I     committee,  and  when  they  are  passed,  engrossed  and 
\    sent  to  the  Commons,  the  provisions  providing  for  ex- 
penditures are  printed  in  red  ink  and,  by  a  fiction,  are 
considered  as  not  there  at  all/ 

Sr    Committees  of  Supply  and  of  Ways  and  Means. 

\Generally  speaking,  the  parliamentary  procedure  for 
^granting  supplies  to  the  government  is  similar  to  that 
followed  in  the  English  Parliament.  The  standing 
orders  provide  that  immediately  after  the  speech  from 
the  throne  opening  the  session,  and  the  reply  thereto, 
committees  of  supply  and  of  ways  and  means  shall  be 
constituted.  Before  going  into  Committee  of  Supply, 
however,  the  House  expects  to  receive  from  the  Govern- 
ment the  Estimates  for  the  coming  fiscal  year,  and  these 
Estimates,  together  with  the  message  of  transmissal  of 
the  Governor  General,  are  referred  to  the  Committee  of 
Supply. 

As  provided  in  the  standing  order  already  quoted,  all 
revenue  appropriation  bills  must  be  considered  in  these 
committees.  This  rule  applies  not  only  to  all  motions  in- 
volving direct  expenditures,  but  also  to  any  measures 
which  release  or  diminish  the  amount  of  sums  due  to  the 
state. 

The  Committees  of  Supply  and  of  Ways  and  Means 
are  committees  of  the  whole  House.     The  advantages 

1  Bourinot,  p.  493. 

102 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

obtained  from  the  formal  change  in  the  constitution  of 
the  House  are  very  slight.  The  Speaker  is  replaced  by 
a  chairman — the  chairman  of  committees,  or  a  deputy 
appointed  by  the  Speaker — and  the  right  of  members  to 
speak  more  than  once  on  the  same  question  is  granted. 
The  previous  question  is  not  in  order  in  committee. 
The  quorum  is  the  same  as  of  the  House  itself,  namely, 
twenty  members. 

Vl^ebate.  The  old  English  principle  that  the  redress 
of  grievances  should  precede  the  grant  of  supplies  to  the 
Crown  is  followed  in  Canada  and,  consequently,  when 
the  motion  is  made  that  the  House  go  into  committee  "to 
consider  of  the  supply  to  be  granted  to  His  Majesty,''  it 
is  in  order  for  any  kind  of  amendment  to  be  offered 
whether  it  relates  to  supply  or  not. 

*  *  *  but  there  are  certain  limitations  to  this  right. 
Only  one  amendment  can  be  moved  to  the  question, 
"that  Mr.  Speaker  do  now  leave  the  chair."  If  that 
amendment  is  negatived,  a  discussion  on  other  ques- 
tions may  be  raised  but  no  other  motion  can  be  pro- 
posed. If  the  amendment  is  withdrawn,  however, 
another  amendment  can  be  at  once  submitted  to  the 
house.  The  ordinary  rules  of  debate  are  applicable 
on  this  occasion;  for  instance,  a  matter  already 
decided  by  the  House,  or  of  which  notice  has  been 
given,  or  which  stands  upon  the  orders  of  the  day, 
cannot  be  discussed;  nor  can  any  subject  or  matter 
of  detail  which  should  be  discussed  in  committee,  be 
debated  on  these  occasions;  nor  can  debate  or  amend- 
ment be  permitted  relating  to  grants  already  agreed 
to,  or  to  resolutions  which  will  be  proposed  in  the 
committee,  or  in  the  committee  of  ways  and  means, 
or  to  items  in  the  estimates.  It  is  not  the  practice 
in  the  Canadian  Commons  to  give  notice  of  any 
amendments  to  be  proposed  at  this  stage,  though  it 

103 


THE  CANADIAN  BUDGETARY  SYSTEM 

is  sometimes  done.  In  the  British  Commons,  notice 
is  always  given  of  amendments  to  be  proposed  to  the 
motion  for  going  into  committee  of  supply.  Mem- 
bers may,  however,  discuss  various  questions  on  the 
motion  for  the  speaker  to  leave  the  chair,  without 
moving  any  amendment  thereto — a  great  latitude 
being  allowed  on  such  occasions.  The  adjournment 
of  the  House  is  in  order  at  this  stage,  and  it  is  also 
allowable  to  move  an  address  to  the  sovereign  or  to 
the  governor-general. 

When  an  amendment  has  been  moved  to  the  ques- 
tion for  the  speaker  to  leave  the  chair,  discussion 
should  be  properly  confined  to  its  subject-matter. 
When  an  amendment  is  negatived,  a  debate  may  be 
raised  when  the  speaker  again  puts  the  question,  on 
the  general  policy  of  the  government,  or  on  some 
other  subject,  not  embraced  within  the  exceptions 
just  mentioned.' 

A  similar  freedom  of  amendment  and  debate  is  per- 
mitted upon  the  motion  to  go  into  committee  of  ways  and 
means.^ 

Procedure  in  Committee  of  Supply.  The  Canadian 
procedure  is  to  have  all  appropriations  first  voted  in 
the  Committee  of  Supply  in  the  shape  of  resolutions. 
The  Estimates  laid  before  the  House  are  divided  into 
several  hundred  subdivisions  or  votes  appertaining  to  the 
various  public  services  and  arranged  in  alphabetical 
order.     A  separate  resolution  must  be  passed  in  the 

^  Bourinot,  p.  420. 

2  "The  House  is  not  necessarily  called  upon  to  go  into  committee  of 
ways  and  means  with  any  frequency,  as  its  action  is  only  imperative  to 
vote  duties  of  customs  and  excise  or  order  payments  out  of  consolidated 
funds  to  meet  votes  of  supply;  but  whenever  the  motion  is  made  for  the 
Speaker  to  leave  the  chair  to  go  into  ways  and  means,  members  may 
address  the  House  on  any  subject  of  public  importance  or  move  amend- 
ments under  the  same  rules  as  govern  on  going  into  committee  of  supply." 
Bourinot,  p.  423. 

104 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

committee  for  each  vote,  which  resolution  is  proposed 
in  each  instance  by  the  chairman. 

In  order  that  members  may  properly  equip  themselves 
for  the  ensuing  discussion,  they  are  supplied  with  a 
printed  copy  of  the  Estimates  and  also  with  the  Auditor 
General's  detailed  report  of  government  expenditures 
for  the  fiscal  year  just  passed.  It  is  customary  to  fur- 
nish this  report  before  the  Committee  of  Supply  meets.' 
Its  scope  and  character  will  be  more  specifically  discussed 
in  the  chapter  which  deals  with  the  audit  of  public  ac- 
counts. 

Debate  on  the  resolutions  proposed  in  the  Committee 
of  Supply  is  unlimited  and  members  are  allowed  to  speak 
as  often  as  they  please.  No  increase  in  the  grant  con- 
tained in  the  resolution  can  be  moved  however.  If  the 
members  of  the  committee  are  convinced  of  the  ad- 
visability of  increasing  the  appropriation  recommended, 
they  are  confined  to  communicating  their  wishes  to  the 
government.  Should  the  Ministry  acquiesce  in  the  vSUg- 
gestion  made,  another  message  is  brought  down  from 
the  Governor  General  at  their  instance  recommending 
an  additional  grant  beyond  the  amount  originally  speci- 
fied in  the  Estimates.  On  the  other  hand,  if  the  Com- 
mittee of  Supply  is  dissatisfied  with  the  contents  of  a 
resolution,  the  only  amendment  which  it  can  adopt  is 
one  reducing  the  amount  of  the  appropriation.  When 
such  amendment  is  under  discussion,  members  can  show^ 
the  impropriety  of  the  government's  estimate.     It  is  not 

1  "I  do  not  recall  that  we  were  ever  asked  to  go  into  Supply  before 
the  report  of  the  Auditor  General  was  in  our  hands."  Mr.  McMullen- 
Can.  Hansard,  1896,  ist  Sess.,  p.  ^^\. 

"It  is  contrary  to  all  custom  and  all  rule  that  we  should  proceed  to 
consider  the  estimates  without  having  the  Auditor  General's  report  before 
us."    Sir  Richard  Cartwright— Ibid,  p.  766. 


i\ 


THE  CANADIAN  BUDGETARY  SYSTEM 

within  the  power  of  the  House  to  adopt  another  method 
of  expenditure. 

Motions  to  reduce  the  amount  of  an  appropriation  are 
seldom  made. 

I  happen  to  have  in  my  hand  a  list  of  the  items  of 
expenditure  which  the  Liberal  opposition  moved 
against  during  the  whole  period  of  eighteen  years 
during  which  the  Conservative  party  were  in  office, 
and  we  will  see  what  they  were.  In  1879  the  present 
Minister  of  Trade  and  Commerce  (Hon.  Sir  Richard 
Cartwright)  proposed  to  make  a  reduction  of  $70,000 
in  the  expenditure  for  civil  government.  In  1880  no 
objection  was  taken.  In  1881  they  were  silent;  they 
did  not  move  any  resolution.  In  1882  Mr.  Mills  pro- 
posed a  reduction  of  $8,000  being  payment  for  dam- 
ages to  a  steamer  known  as  the  U.  C.  Upper.  In 
1883  no  resolution  was  moved  against  the  expendi- 
ture; in  1884  no  resolution;  in  1885,  no  resolution; 
in  1886,  no  resolution;  in  1887,  no  resolution;  in  1888, 
no  resolution.  In  1889  the  present  Minister  of  Trade 
and  Commerce  moved  that  the  vote  for  Manitoba 
penitentiaries  be  reduced  by  $10,526.  ...  In  1890 
no  resolution  was  moved  by  honorable  gentlemen 
opposite.  Nor  was  any  moved  in  1891,  1892,  1893, 
1894,  1895,  and  1896.  .  .  .  Mr.  Speaker,  during  the 
whole  period  of  eighteen  years  in  which  there  was  an 
expenditure  of  $603,000,000  in  round  numbers,  these 
gentlemen  only  objected  in  the  irregular  way  I  have 
mentioned  to  $447,000  of  it.' 

Unless  the  government  gives  notice  to  the  contrary, 
the  Committee  of  Supply  takes  up  the  Estimates  in 
regular  order. 

When  the  estimates  of  a  particular  department  are 
under  consideration  in  the  Committee  of  Supply,  the 
established   usage   requires   that  the   minister   respon- 

1  Mr.  James  Clancy — Can,  Hansard,  1902,  p.  2341. 

106 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

sible  for  the  insertion  of  the  various  items  should  be  on 
hand  to  defend  and  to  explain  them  to  the  House. 
Where  the  department  estimates,  like  those  of  the  Public 
Works  Department,  comprise  many  individual  items, 
concerning  all  of  which  the  minister  could  hardly  be  ex- 
pected to  be  fully  posted,  a  minor  official  is  permitted  to 
attend  to  supply  any  needed  information. 

I  have  seen  Sir  Hector  Langevin,  when  Minister  of 
Public  Works,  stand  for  hours  with  his  book  in  his  hand 
and  his  deputy  beside  him,  and  give  all  information 
regarding  the  item  in  advance  without  waiting  to  be 
asked.  If  anything  were  neglected  or  forgotten  in 
his  memo,  he  would  ask  his  deputy.^ 

Besides  being  resented,  the  absence  of  a  minister  upon 
such  an  occasion  leads  to  the  passing  or  reservation  of 
items. 

I  beg  to  call  the  attention  of  the  leader  of  the  Gov- 
ernment to  the  fact  that  it  deprives  the  House  of  all 
the  freedom  it  ought  to  have  on  concurrence  to  have 
the  Minister  absent." 

Mr.  Foster — Who  has  charge  of  these  items? 

Mr.  Fielding — The  Minister  of  Trade  and  Com- 
merce (Sir  Richard  Cartwright)  has,  but  as  he  is  not 
present  just  now  if  there  is  objection  to  any  particular 
item,  it  can  stand  over.^ 

Sir  Wilfrid  Laurier — The  opposition  want  certain 
information  and  they  are  entitled  to  it  and  must  get 
it,  and  in  the  meantime  we  can  reserve  an  item  so 
that  the  question  at  issue  may  be  fully  discussed. 

Mr.  Monk — I  must  confess  that  the  system  of  pass- 
ing items  and  of  reserving  one  is  not  a  good  one.  It 
results  in  items  being  passed  without  full  or  proper 

1  Mr.  Edwards— Can.  Hansard,  1909-10,,?.  703. 

8  Mr.  Foster— Can.  Hansard,  1896,  2nd  Sess.,  p.  2546. 

•'  Can.  Hansard,  1896,  2nd  Seas.,  p.  2021. 

107 


J 


t= 


THE  CANADIAN  BUDGETARY  SYSTEM 

discussion,  and  generally  the  reserved  item  comes  up 
when  everyone  who  wants  information  is  absent/ 

The  task  of  arranging  the  details  of  the  debates  in  the 
Committee  of  Supply  is  left  to  the  party  whips.  Certain 
votes  in  the  Estimates  are  selected  for  lengthy  discus- 
sion and  each  party  is  given  an  opportunity  of  dwelling 
on  items  which  are  deemed  to  be  of  special  importance. 
Sometimes  members  from  the  opposite  sides  of  the  House 
speak  in  rotation  which  adds  much  to  the  piquancy  and 
value  of  the  debates  on  the  Estimates.  After  each  of 
its  sittings,  the  Committee  of  Supply  formally  reports 
progress  to  the  Speaker  of  the  House  and  obtains  leave 
to  sit  again  until  it  has  finished  the  consideration  of  the 
estimates  of  expenditures. 

With  regard,  generally,  to  the  consideration  of  the 
Estimates  by  the  House  it  may  be  said  that  while  in  the 
early  days  of  the  session  there  is  considerable  debate, 
each  item  opening  up  a  field  for  a  discussion  of  the 
operations  of  the  department  concerned,  in  the  later 
stages  the  attention  of  the  House  becomes  less  keen,  and 
during  the  last  weeks  of  the  session  immense  sums 
are  often  voted  with  little  or  no  discussion.  This  is, 
however,  an  experience  which  is  met  with  in  nearly 
all  popular  legislative  chambers. 

Report  Stage.  As  soon  as  the  Committee  of 
Supply  has  finished  its  labors  and  has  passed  resolutions 
covering  all  the  estimates,  the  action  of  the  committee 
is  reported  to  the  House  and  a  further  opportunity  for 
debate  furnished  when  the  acceptance  of  its  report  is 
under  consideration.  At  this  stage  of  legislation,  how- 
ever, each  member  of  the  House  is  allowed  to  speak 

'  Can.  Hansard  1907-08,  4006,  et  se. 

108 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

only  once.  When  the  report  of  the  Committee  of  Sup- 
ply is  finally  disposed  of,  it  is  the  duty  of  the  Minister 
of  Finance  to  move  that  the  House  go  again  into  Com- 
mittee of  the  Whole,  sitting  this  time  as  the  Committee 
on  W^ays  and  Means  for  the  purpose  of  considering 
resolutions  appropriating  certain  sums  out  of  the  Con- 
solidated Revenue  Fund  ^'towards  making  good  the  sup- 
ply granted  to  His  Majesty."  These  resolutions  of  the 
Ways  and  Means  Committee  must  contain  the  same 
sums  which  have  been  already  voted  in  the  Committee 
on  Supply.  Although  largely  duplicating  the  work  of 
the  last  named  committee,  these  resolutions  must  be 
formally  passed  in  the  Committee  of  Ways  and  Means, 
reported  back  to  the  House  and  agreed  to,  before  a  sup- 
ply bill  founded  on  the  same  can  be  introduced  in  the 
Commons.  By  this  procedure  members  are  given  an 
additional  opportunity  to  pass  upon  the  Government's 
recommendations. 

In  order  to  permit  of  their  proper  consideration,  these 
formal  resolutions  from  the  Supply  and  Ways  and 
Means  Committees  are  not  supposed  to  be  reported  to 
the  House  on  the  same  day  in  which  they  are  agreed 
to  in  committee.  When  resolutions  from  the  Ways  and 
Means  Committee  are  formally  reported  to  the  House, 
they  stand  as  read  for  the  first  time  and  are  never  dis- 
cussed or  debated  at  this  stage.  On  the  second  reading, 
each  resolution  is  read  separately  and  the  question  put 
whether  the  committee's  report  be  concurred  in  or  not. 
Debate  is  then  in  order  and  amendments  are  allowed, 
for  any  supply  resolution  can  be  reduced  after  having 
been  thus  reported  without  the  House  having  to  trans- 
fer itself  again  into  Committee  of  Ways  and  Means. 
It  frequently  happens  that  resolutions  are  withdrawn 

109 


THE  CANADIAN  BUDGETARY  SYSTEM 

after  their  second  reading  or  referred  back  to  the  com- 
mittee for  the  purpose  of  effecting  some  amendment. 
Only  during  very  recent  years  has  it  been  found  ex- 
pedient to  apply  the  closure  to  debates. 

Supply  Bills.  As  soon  as  the  House  has  concluded 
its  consideration  of  the  supply  resolutions  reported  to  it 
by  the  Ways  and  Means  Committee,  the  Minister  of 
Finance  introduces  the  corresponding  appropriation  or 
supply  bills.  In  these  bills  all  the  supply  votes  passed  by 
Parliament  are  recited  in  detail.  They  differ  from  other 
bills  in  that  their  preambles  assume  the  shape  of  an 
address  to  the  British  sovereign.^  The  supply  bill  also 
directs  that  a  detailed  account  of  the  sums  expended 
under  its  authority  shall  be  laid  before  Parliament  dur- 
ing the  first  fifteen  days  of  the  ensuing  session. 
Although  a  very  unusual  occurrence,  it  is  entirely  regu- 
lar to  inaugurate  a  debate  or  to  propose  amendments  at 
the  three  several  readings  of  a  supply  bill.  Although 
introduced  late  in  the  session,  all  the  items  contained  in 
these  formal  appropriation  acts  have,  as  has  been  shown, 
been  previously  before  the  Commons  for  discussion. 

As  earlier  brought  out,  the  amount  appropriated  for 
the  various  government  services  in  the  supply  bills  of 
the  Dominion  is  merely  the  gross  total  of  all  the  items 
originally  embodied  in  the  Estimates  and  asked  to  be 
voted  by  Parliament.  Payments  such  as  salaries  of 
permanent  officials  and  interest  on  the  public  debt  which 

^  The  phraseology  is  as  follows :  "Most  Gracious  Sovereign,  Whereas 
it  appears  by  messages  from  His  Excellency  the  Most  Noble  Victor 
Canistian  William,  Duke  of  Devonshire,  etc.,  etc..  Governor  General  of 
Canada,  and  the  estimates  accompanying  the  said  messages,  that  the  sums 
hereinafter  mentioned  are  required  to  defray  certain  expenses  of  the 
public  service  of  Canada,  not  otherwise  provided  for  ;  .  .  May  it  there- 
fore be  enacted,  and  be  it  enacted  by  the  King's  Most  Excellent  Majesty, 
by  and  with  the  advice  and  consent  of  the  Senate  and  House  of  Commons 
of  Canada,  that: —  ..." 

IIO 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

do  not  have  to  be  voted  annually  are  outside  the  pur- 
view of  the  supply  bills.  Whenever  it  is  desired  to 
effect  a  change  in  these  payments  authorized  to  be  made 
by  law  and  not  by  the  supply  bill  itself,  a  resolution  is 
introduced  by  one  of  the  Cabinet  that  the  House  re- 
solve itself  into  a  committee  of  the  whole  to  consider  the 
proposed  amendment  to  the  existing  statute.  At  the 
same  time  the  Minister  informs  the  House  that  the 
Governor  General  is  both  acquainted  with  the  subject 
matter  of  the  resolution  and  recommends  it  to  the 
House.  After  the  amending  resolution  has  been  favor- 
ably acted  upon  in  committee,  reported  back  to  and  ac- 
cepted by  the  House  on  second  reading,  the  Minister  is 
then  given  leave  to  introduce  a  bill  embodying  the  pro- 
posed change  in  the  permanent  grant  previously  made. 
This  bill  is  passed  then  in  the  ordinary  way. 

Adequacy  of  Consideration  of  the  Estimates  by 
Parliament.  It  appears  that  the  consideration  by  the  ly/^ 
Parliament  of  the  Estimates  submitted  to  it  by  the  / 
Executive  is  by  no  means  adequate.  This  is  partly  due 
to  difficulties  inherent  in  the  task,  partly  to  the  circum- 
stances that  the  Estimates  are  not  always  offered  in  a 
sufficiently  detailed  form,  and  partly  to  the  fact  that  the 
House  of  Commons  has  not  itself  seen  fit  to  establish 
within  itself  a  special  committee  or  other  agency  whose 
special  function  it  is  to  study  and  criticize  the  execu- 
tive expenditure  propositions  and  thus  bring  the 
contestable  points  before  the  whole  House  in  such  a 
form  that  they  may  be  understood  and  intelligently 
passed  upon.  The  difficulties  inherent  in  an  adequate 
scrutiny  of  public  estimates  by  a  large  legislative  body 
arise  out  of  the  number  of  items  that  have  to  be  ex- 

III 


THE  CANADIAN  BUDGETARY  SYSTEM 

amined  and  the  fact  that  their  propriety  must  in  large 
measure  depend  upon  considerations  which  can  be  fully 
known  and  understood  only  by  those  who  have  the  spend- 
ing of  them.  These  inherent  difficulties,  however,  in- 
stead of  justifying  a  feeling  of  incompetency  upon  the 
part  of  the  legislature  and  a  disposition  to  shirk  its 
duties  as  custodian  of  the  interests  of  the  people,  should, 
upon  the  contrary,  excite  it  to  every  possible  effort  to 
adopt  means  whereby  its  control  of  the  public  purpose 
may  be  exercised  as  effectively  as  is  practically  possible. 
Increase  of  Expenditures.  At  the  present  time, 
the  annual  ordinary  expenditures  of  the  Dominion  gov- 
ernment are  over  ten  times  what  they  were  in  the  first 
year  after  confederation.  This  growth  in  the  volume 
of  expenditure  is  making  it  more  difficult  from  year  to 
year  for  the  Dominion  Parliament  adequately  to  con- 
sider and  discuss  the  government  estimates. 

We  must  recollect  that  conditions  are  very  different 
from  what  they  were.  When  w^e  were  a  small  coun- 
try with  a  small  revenue  and  a  small  expenditure, 
each  minister  himself  had  a  greater  check  on  the  work 
of  his  department  than  he  has  today.  The  govern- 
,  ment  had  a  greater  check  and  so  had  parliament,  but 
.\  when  these  operations  are  multiplied  a  hundred  fold, 
my  view  is  that  these  checks  are  absolutely  inade- 
quate, and  that  something  more  ought  to  be  supplied. 
What  check  have  the  ministers  over  an  expenditure 
of  some  $100,000,000,  extending  all  over  this  country, 
and  on  most  diversified  subjects?  Under  present 
conditions,  they  are  almost  entirely  at  the  mercy  of 
others.  They  cannot  give  this  expenditure  the  per- 
sonal supervision  which  they  could  an  expenditure 
of  a  fairly  moderate  amount;  either  in  its  planning  or 
its  carrying  out.  That  applies  to  the  different  great 
departments  of  this  government  and  to  the  minister 

112 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

of  each  of  these  departments.  With  the  outside  work 
he  has  to  do,  with  the  cabinet  work  which  takes  up 
his  time,  no  minister  can  have  that  check  which  ought 
to  be  had  over  the  administration  of  his  own  depart- 
ment in  the  way  of  expenditure.  But  you  will  say 
the  cabinet  checks  the  minister.  That  used  to  be  the 
case  when  we  had  a  smaller  expenditure,  and  when 
practically  every  item  came  before  the  cabinet  and 
was  explained,  and  passed  upon  by  the  cabinet.  But 
today  that  would  be  absolutely  impossible.  It  is  not 
attempted  to  be  done  except  in  some  very  special 
instances,  and  the  result  is  that  the  supervision  and 
check  of  the  cabinet  over  department  expenditure  has 
largely  passed  away.  .  .  .  But  you  may  say  that 
ultimately  the  House  of  Commons  will  be  a  check. 
Yes,  it  used  to  be,  but  it  is  not  any  longer  to  any 
considerable  extent.  When  I  first  came  to  this  House, 
the  items  in  supply  were  criticised  by  men  on  the 
government  benches  as  well  as  in  the  opposition.  But 
today,  once  the  estimates  are  on  the  table,  tell  me, 
have  you  ever  seen  a  government  member  attempt 
anything  at  all  in  the  way  of  criticism  of  any  of  these 
estimates?  The  minister  who  is  putting  through  his 
estimates  is  left  alone  by  his  followers,  and  has  the 
whole  business  to  attend  to  by  himself.  And  on  the 
opposition  side,  whatever  may  be  our  energy  and  dis- 
position to  work,  it  is  impossible  under  present  condi- 
tions, when  $1 15,000,000  of  estimates  are  turned  loose 
on  the  House,  without  any  information  in  the  esti- 
mates themselves,  it  is  absolutely  impossible  for  the 
opposition  to  exercise  any  effective  check.^  All  they 
can  do  is  to  wheedle  out  from  the  minister  in  charge, 
who  is  anxious  to  give  no  more  information  than  he 
is  absolutely  obliged  to  give,  what  details  they  can.* 

On  account  of  the  rapid  growth  in  Canada's  popula- 
tion, a  more  or  less  steady  increase  in  government  ex- 

1  Mr.  Foster— Can.  Hansard,  1910-11,  p.  6603. 


THE  CANADIAN  BUDGETARY  SYSTEM 

penditure  must  be  counted  upon  hereafter.  This  will 
further  augment  the  difficulties  already  experienced  in 
the  Dominion  House  of  Commons  in  intelligently  dis- 
cussing and  controlling  the  budgetary  Estimates.  In- 
deed, as  things  now  are,  items  of  comparatively  small 
importance  will  be  often  debated  at  length,  while  large 
appropriations  are  rushed  through  the  House  without 
any  proper  consideration. 

1  have  known  an  item  of  $40,000  in  this  House  to 
take  up  a  whole  sitting  and  items  aggregating 
$10,000,000  to  be  passed  in  ten  minutes  without 
proper  consideration.^ 

In  England,  a  similar  trouble  has  been  encountered. 

During  my  experience  of  the  last  Parliament,  I 
observed  that  every  year  in  round  figures,  we  voted 
something  like  £50,000,000  of  public  money  without 
any  discussion  whatever.  ...  In  practice  it  has  been 
found  that  those  responsible  for  the  estimates  have 
not  been  loth  to  allow  the  House  to  fritter  away  most 
of  the  allotted  time  in  discussing  trivialities,  while 
many  millions  are  voted  in  as  many  minutes  towards 
the  end  of  the  session  without  the  slightest  pretence 
of  examination  or  debate.^ 

Several  suggestions  have  been  made  for  attaining  a 
more  effective  control  over  the  Estimates.  The  follow- 
ing is  one  of  these  suggestions : 

Four-fifths  of  the  time  of  this  House  is  taken  up 
in  the  discussion  of  the  Estimates.  I  submit  that 
without  changing  the  rules  of  this  House,  in  so  far 
as  they  affect  the  result,  we  could  reduce  the  length 
of  the  session  by  at  least  six  weeks  by  a  very  slight 
change  in  our  procedure.     If  the  minister  of  any 

i  Mr.  Lewis — Can.  Hansard,  1910-11,  p.  420.  '    , 

2  Mr.  Bottomley— Hansard's  Debates  (N.  S.)  Vol.  12,  p.  213-14 
(Nov.  5,  1909.) 

114 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

department  will  give  notice  that  two  weeks  from  a 
certain  day  he  will  be  in  Room  62,  or  whatever  com- 
mittee room  it  may  be,  with  his  estimates  at  a  certain 
hour,  say  10  A.  M.,  and  let  any  honorable  member 
in  this  House  be  allowed  to  go  there  and  investigate 
the  various  items,  it  will  be  possible  to  pass  all  non- 
contentious  items  en  bloc.  It  would  not  affect  the 
contentious  items  being  brought  up  in  this  House. 
...  If  they  (the  Government)  would  simply  have 
the  estimates  carefully  examined  by  this  mode  and 
all  non-contentious  items  passed  en  bloc,  a  great  im- 
provement in  the  procedure  would  be  effected.  The 
opposition  could  appoint  a  committee  to  attend,  but 
any  member  of  the  House  would  be  at  liberty  to  ask 
any  questions  with  regard  to  any  item  that  he  desired. 
Hours  and  hours  of  useful  time  of  this  country  would 
be  saved  as  well  as  thousands  of  dollars.^ 

In  effect,  examination  of  non-contentious  items  in 
advance  of  their  consideration  by  the  House  of  Com- 
mons is  here  proposed.  The  appointment  of  a  regular  \  " 
standing  committee  of  the  House  to  go  over  all  the  esti- 
mates for  the  coming  fiscal  year,  in  advance  of  their  sub- 
mission to  Parliament,  has  also  been  advocated. 

Your  commission  would  suggest  that  from  the 
House  of  Commons  a  small  committee  be  created  to 
be  called  the  ''Estimates  Committee"  to  whom  the 
estimates  might  be  referred  for  examination  before 
being  passed  upon  by  the  House  and  that  such  com- 
mittee should  have  power  to  call  for  persons  and 
papers  if  considered  desirable;  the  committee  to 
ascertain  full  particulars  of  the  several  votes  asked 
for  and  any  explanations  that  may  be  desired.  This 
procedure  would  in  all  probabiHty  relieve  the  House 

1  Mr.  Lewis— Can.  Hansard,  1910-11,  p.  420. 


THE  CANADIAN  BUDGETARY  SYSTEM 

from  the  delays  now  occurring  in  committee  of  supply 
and  would  tend  to  shorten  the  session/ 

A  committee  of  fifteen  members,  like  the  one  just  pro- 
posed, has  existed  in  the  English  House  of  Commons 
during  the  last  few  years  to  examine  the  estimates  for 
the  current  fiscal  year.  Instead  of  reviewing  all  the 
estimates,  however,  this  new  committee  only  examines 
certain  sections  of  them  at  each  parliamentary  session 
for  the  purpose  of  detecting,  if  possible,  extravagant, 
reduplicated  or  obsolete  items  of  expenditure.  To  have 
all  of  Great  Britain's  Estimates  scrutinized  in  this 
fashion,  the  proposal  is  advanced  that  no  less  than  four 
such  estimates  committees  should  be  appointed." 

Votes  on  Account.  I-n  order  that  the  appropria- 
tions may  correspond  as  nearly  as  possible  to  the  fiscal 
needs  of  the  year  to  which  they  are  applicable,  it  is  de- 
sirable that  as  short  a  time  as  possible  should  intervene 
between  the  time  they  are  passed  and  the  time  when 
their  expenditure  is  called  for.  In  the  United  States  it 
has  been  felt  necessary  that  as  nearly  as  possible  all  the 
appropriations  for  a  fiscal  year  should  be  made  before 
the  beginning  of  the  year.  In  England  and  in  France, 
however,  this  has  not  been  deemed  imperative.  In  both 
countries  the  final  appropriations  are  not  made  until  well 
into  the  year  to  which  they  apply.  Before  they  become 
available  the  current  needs  of  the  government  are  met 
in  England  by  the  passing  of  what  are  called  'Votes  on 
account".  In  France  the  same  result  is  reached  by  what 
are  termed  douziemes  provisoires.  These  latter  have 
been  defined  as  ''an  authorization  to  collect  taxes  and 

1  Report  of  Royal  Commission  on  the  Civil  Service,  Sessional 
Papers,  1907-08,  Vol.  XLII  No.  29a,  p.  24. 

2  See  London  Economist  of  October  28,  1916. 

116 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

pay  public  expenditures  over  a  certain  number  of 
months,  in  accordance  with  a  temporary  allotment." 
It  is,  however,  to  be  said  with  reference  to  the  French 
practice  that  the  douziemes  provisoires  are  employed  not 
so  much  from  a  deliberate  desire  to  synchronize  as 
nearly  as  possible  the  voting  and  expenditure  of  public 
moneys,  as  to  escape  from  a  situation  brought  about  by 
the  Chambers  failing  to  act  as  promptly  as,  in  principle, 
it  is  deemed  they  should  act.  Thus,  says  Stourm: 
''When  the  fiscal  year  is  about  to  open,  and  the  Cham- 
bers lack  time  to  reach  a  vote  on  the  whole  fiscal  law 
prior  to  December  31  [the  fiscal  year  in  France  begins 
January  i  ] ,  a  partial  budget  hastily  prepared,  covering 
a  few  months  and  calculated  grosso  modo,  is  voted. 
The  douziemes  provisoires  are,  therefore,  designed  to 
legalize  an  abnormal  situation."'  Though  thus  stigma- 
tized as  abnormal,  the  incidentally  beneficent  result  is  to 
shorten  the  period  between  the  time  of  making  the  ap- 
propriations and  their  expenditure.  And  thus  Stourm 
is  led  to  say:  "It  is  doubtful  whether  in  themselves  the 
douziemes  provisoires  really  deserve  such  absolute  con- 
demnation. Are  they  not  condemned,  in  the  first  place, 
because  they  are  introduced  irregularly  and  hastily, 
without  due  consideration  ?  Let  them  became  a  regular 
institution  and  perhaps  we  shall  be  able  to  appreciate 
them."^ 

In  Canada  a  system  is  employed  which  is  not  exactly 
the  same  but  approximates  to  that  of  Great  Britain.  In 
Great  Britain  the  votes  on  account  take  the  form  of  lump 
sum  appropriations,  the  expenditure  of  which  is  re- 
stricted to  services  already  authorized.     In  Canada  the 

^The   Budget,  by   Rene  Stourm;   A  Translation   (Studies  in   Ad- 
ministration, Institute  for  Government  Research,  1917),  p.  326. 
2  The  Budget,  p.  330. 

117 


THE  CANADIAN  BUDGETARY  SYSTEM 

plan  is  followed  of  appropriating  fractional  amounts  of 
all  the  items  contained  in  the  Estimates.  Thus,  for  ex- 
ample, on  February  6,  191 7,  the  House  of  Commons,  in 
Appropriation  Act  No.  i,  provided  that  one-fourth  of  the 
several  items  appearing  in  Schedule  A  of  the  act  should 
be  made  available.  In  Schedule  B  were  enumerated 
items  which  were  appropriated  in  their  entirety.'  In  a 
second  appropriation  measure  passed  by  the  Commons 
on  July  6,  1917,  the  remaining  three-fourths  of  most  of 
the  items  in  the  Schedule  A  of  the  earlier  act  were  ap- 
propriated, and  one-sixth  of  the  amounts  enumerated 
in  a  second  schedule.  On  September  3  and  September 
19,  further  acts  were  passed  completing  the  appropria- 
tions for  the  year.  It  thus  appears  that  nearly  one-half 
of  the  fiscal  year  had  expired  before  the  final  appropria- 
tions were  made. 

Revenue  Measures.  As  in  the  case  of  the  Esti- 
mates, the  approval  of  the  Governor  General  must  first 
be  obtained  before  any  change  in  the  existing  tax  laws 
can  be  brought  to  the  attention  of  the  House. 

When  any  impost  or  tax  is  to  be  put  on  the  people, 
the  first  step  to  be  taken  by  the  government-  is  to 
announce  to  the  House  that  they  have  the  consent 
of  His  Excellency  to  the  introduction  of  a  measure. 
That  is  a  safeguard  which,  according  to  all  constitu- 
tional authorities,  is  of  vast  interest  to  the  people.' 

In  regard  to  the  consideration  and  passage  of  revenue 
laws,  the  Canadian  practice  is  to  have  all  changes  in  the 
existing  tax  laws  or  propositions  for  the  imposition  of 
new  forms  of  taxation  first  considered  in  the  Committee 

^  The  items  in  Schedule  B  were  based  upon  the  Supplementary 
Estimates  for  the  year  1916-1917. 

2  Mr.  Lennox — Can.  Hansard,  1904,  p.  1826. 

118 


PARLIAMExNTARY  ACTION  UPON  ESTIMATES 

of  Ways  and  Means.  This  is  done  by  the  Minister  of 
Finance  giving  notice  that,  when  the  House  goes  into 
Committee  of  Ways  and  Means,  he  will  move  the  pas- 
sage of  certain  resolutions  providing  for  changes  in  the 
existing  tax  laws.  Generally  these  resolutions  deal 
w^ith  a  revision  of  the  custom  duties  and  excise  charges 
from  which  the  Dominion  derives  the  greater  part  of  its 
revenues. 

Logically,  it  might  seem  that  the  House  should  not 
take  up  the  question  of  changes  in  the  revenue  laws  until 
the  expenditures  to  be  met  had  been  decided  in  Com- 
mittee of  Supply.  In  fact,  however,  especially  with 
reference  to  the  tariff,  it  is  held  proper  for  the  Finance 
Minister  to  move  that  the  House  go  into  Committee  of 
Ways  and  Means  without  waiting  for  action  by  the 
Committee  of  Supply. 

Budget  Speech.     The  budget   speech^  is  usually    ^    y 
made  upon  the  motion  to  go  into  Committee  of  Ways 
and   M^ans.     Upon   some   occasions,   however,    it   has 
been  delivered  upon  the  motion  to  go  into  Committee  of 
Supply.     In  this  speech  the  Minister  of  Finance  analyzes 
the  receipts  and  expenditures  for  the  past  and  estimates    |       / 
those   of   the    coming   year,    discusses    the    immediate    |    / 
financial  outlook  and  discloses  to  the  House  any  new    j 
scheme  of  taxation  which  the  Government  intends  to 
put   into   effect.     The   Canadian   budget   speeches   are 
often  delivered  with  the  object  of  creating  party  capital. 

It  has  been  the  custom  of  those  delivering  the 
Budget  speech  in  the  past  to  go  back  to  a  number  of 

1  This  speech  is  generally  termed  the  "Budget".  This,  however,  is 
a  loose  use  of  the  word  for,  as  has  been  earlier  pointed  out,  the 
Budget  properly  speaking,  is  the  document  containing  balanced  finan- 
cial statements,  recommended  expenditures  and  proposed  revenue 
measures  with  estimates  of  their  probable  yield  For  a  typical  budget 
speech,  see  Appendix  4. 

119 


THE  CANADIAN  BUDGETARY  SYSTEM 

years  and  make  comparisons,  and  they  were  always 
odious  comparisons  between  what  the  then  govern- 
ment did  and  what  past  governments  had  or  had  not 
done." 

Formerly  the  rule  in  the  Dominion  House  was  that 
the  Estimates  could  not  be  taken  up  until  after  the 
budget  speech  had  been  delivered.  If  Parliament  was 
to  dispatch  its  business  quickly  therefore,  it  was  essen- 
tial to  have  the  budget  speech  delivered  early  in  the 
session. 

By  our  former  practice  the  estimates  were  not  dis- 
cussed until  after  the  budget  speech  had  been  deliv- 
ered, and  if  that  was  delayed  a  late  period  was  reached 
before  the  House  was  able  to  undertake  the  discussion 
and  consideration  of  the  estimates. "^ 

Nowadays,  since  the  Estimates  can  be  discussed  at 
any  period  of  the  session,  the  time  when  the  budget 
speech  is  delivered  is  not  of  such  vital  importance. 

It  will  be  remembered  by  the  House  that  three 
years  ago  a  change  was  made  in  our  practice  and  the 
British  method  was  introduced;  that  is  to  say,  the 
estimates  are  brought  down  at  an  early  period  of  the 
session  so  that  they  can  be  considered  from  time  to 
time  as  available  occasions  arise.  And  when  this  is 
done  and  the  estimates  are  before  the  House  and 
ready  for  consideration,  it  is  not  of  such  pressing 
importance  that  the  budget  speech  should  be  deliv- 
ered at  an  early  date.^ 

Nevertheless  as  the  most  important  debates  of  the  ses- 
sion  usually  occur   after   the  delivery  of   the  budget 

^  Hon.  Mr.  Peters,  Prince  Edward  Island  Assembly  Debates,  1891, 
p.  205. 

*  Mr.  Foster — Can.  Hansard,  1890,  p.  1944. 
3  Mr.  Foster — Ibid. 

120 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

speech,  it  is  desirable  to  have  it  made  as  early  as  is  prac- 
ticable. 

The  only  case  in  which  I  should  excuse  delay  in 
bringing  down  the  budget  would  be  when  no  changes, 
or  only  insignificant  changes  are  to  be  made.  In  such 
a  case,  the  particular  time  for  bringing  down  the 
budget  is  a  matter  of  comparatively  small  moment; 
but  whenever  important  changes  are  to  be  made  seri- 
ously affecting  the  trade  and  commerce  of  the  coun- 
try, then  it  is  the  duty  of  the  government  to  bring 
down  the  budget  at  a  particularly  early  period,  so 
that  full  and  ample  time  may  be  afforded  for  their 
discussion/ 

Powers  of  Private  Members.     As  in  the  case  of      i 

\ 


requests  for  appropriations,  it  is  the  established  principle, 
strictly  adhered  to,  that  all  proposals  for  changes  in 
revenue  laws  should  come  from  the  Ministry.  How- 
ever, "all  the  authorities  go  to  show  that,  when  the  gov- 
ernment has  formally  submitted  to  the  House  the  ques- 
tion for  the  revision  of  customs  and  excise  duties,  it  is 
competent  for  a  member  *to  propose  in  committee  to  sub- 
stitute another  tax  of  equivalent  amount  for  that  pro- 
posed by  ministers,  the  necessity  of  the  new  taxation  to 
a  given  extent  being  declared  on  behalf  of  the  Crown.'  \ 
It  is  also  competent  for  any  member  to  propose  another  V/ 
scheme  of  taxation  for  the  same  purpose,  as  a  sub-  1 
stitute  for  the  government  plan.  But  it  is  not  in  order 
to  propose  a  new  and  distinct  tax,  which  is  not  a  mere 
increase  or  diminution  of  a  duty  upon  an  article  already 
recommended  by  the  government  for  taxation,  though 
it  is  the  function  of  this  committee  to  impose  rather  than 
to  repeal  taxes.     A  proposition  for  the  repeal  of  a  duty 

1  Sir  Richard  Cartwright—Can.  Hansard,  1890,  p.  1950. 

121 


THE  CANADIAN  BUDGETARY  SYSTEM 

is  in  order,  and  cases  will  be  found  where  a  proposed 
duty  has  been  struck  out  in  committee."^ 

Reports  of  the  Committee.  Having  been  read  a 
first  and  second  time  and  approved,  resolutions  of  the 
committee  are  reported  to  the  House.  They  are  then 
read  a  first  time,  which  is  a  purely  formal  procedure, 
without  discussion  or  amendments  offered.  Upon  the 
question  of  the  second  reading  there  is  opportunity  for 
a  general  debate.  Remarks  must  be  relevant  to  the 
matter  at  issue.  The  supplies  voted  in  committee  may 
be  reduced  but  not  increased.  If  increases  are  desired, 
there  must  be  recommendations  from  the  Crown  which 
of  course  must  go  through  the  committee  stage.  This 
means  that  every  new  duty  must  be  thus  considered. 
"So  strictly  is  the  rule  enforced  which  requires  every 
new  duty  to  be  voted  in  committee,  that  even  where  the 
object  of  a  bill  is  to  reduce  duties,  and  the  aggregate 
amount  of  duties  will,  in  fact,  be  reduced,  yet  if  any  new 
duty,  however  small,  be  imposed  or  any  existing  duty  be 
increased  in  the  proposed  scale  of  duties,  such  new  or 
increased  duty  must  be  voted  in  committee,  either  be- 
fore or  after  the  introduction  of  the  bill."  ^ 

As  in  England  the  practice  is  to  put  resolutions  of  the 
Committee  of  Ways  and  Means,  changing  excise  and 
customs  duties,  immediately  into  force,  that  is,  before 
they  receive  definite  statutory  form.  In  case  a  resolu- 
tion fails  to  secure  enactment,  the  taxes  thus  levied  are 

1  Bourinot,  Parliamentary  Procedure,  p.  431.  These  principles 
have  been  taken  over  in  Canada  from  English  practices.  Bourinot 
shows,  also,  that,  though  deemed  objectionable,  private  members  may 
propose  resolutions  expressing  an  abstract  opinion  on  the  expediency 
or  inexpediency  of  imposing  a  tax.  And,  both  in  England  and  Canada, 
there  have  been  appointed  committees,  in  opposition  to  the  wishes  of 
the  ministry,  to  consider,  abstractly,  questions  of  taxation, 

2  Bourinot,  p.  438. 

122 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

refunded,  and  the  government  which,  has  assumed  the 
responsibility  obtains  from  Parliament  an  act  of  in- 
demnity. Ordinarily,  however,  the  chances  of  the 
House  refusing  to  adopt  the  resolutions  of  its  Com- 
mittee are  very  slight. 

Supply  Bills  in  the  Senate.     As  has  been  earlier  . 
indicated,  the  Senate  does  not  attempt  to  oppose  its  will       \J 
to  that  of  the  House  with  regard  to  matters  of  finance. 
The  general  questions  of  policy  involved  in  the  supply 
bills  are  usually  discussed  with  considerable  fulness,  but 
the  measures  do  not  go  to  the  Committee  of  the  Whole, 
and  the  bill  itself  not  unusually  goes  through  all  its 
formal  legislative  stages  in  a  single  day.     No  attempt 
is  ever  made  in  the  Senate  to  amend  a   supply  bill. 
Theoretically,  the  Senate  may  reject  the  bill,  but  it  is  not  ,  ^ 
likely  that  the  right  will  ever  be  exercised.       When 
passed  the  bill  is  returned  to  the  Commons  to  be  sub- 
mitted by  it  to  the  Governor  General  for  his  assent. 
This  assent  is  given  in  the  following  terms : 

In  His  Majesty's  name,  his  Excellency,  the  Gov-     \  i^ 
ernor-General,  thanks  his  loyal  subjects,  accepts  their 
benevolence,  and  assents  to  this  bill. 

Addresses  to  the  Crown.  Bourinot  points  out  that, 
in  conformity  with  English  precedent,  when,  because  of 
the  lateness  of  the  session  or  other  reason,  it  is  not  prac- 
ticable to  make  certain  grants  for  specific  expenditures, 
definite  in  amount,  the  House  will  agree  upon  an  Ad-  ^ 
dress  to  the  Crown  authorizing  the  expenditure  with  the 
promise  that  the  House  will  later  vote  the  necessary 
supplies.  Both  in  England  and  Canada  such  addresses 
may  be  moved  by  private  members.  This  is  permitted 
because  the  provision  "that  the  House  will  make  good 

123 


THE  CANADIAN  BUDGETARY  SYSTEM 

the  same,"  necessitates  that  the  supplies  when  granted 
will  have  gone  through  the  regular  legislative  procedure 
which  includes  initial  recommendation  by  the  Ministry. 

Votes  of  Credit.  As  in  England,  so  in  Canada,  in 
order  to  meet  emergencies,  the  House,  upon  occasions, 
votes  what  are  known  as  credits,  which  place  round 
Slims  at  the  disposal  of  the  Executive,  such  parts  of 
these  sums  to  be  expended  as  may  be  found  necessary. 
Thus,  upon  the  outbreak  of  the  great  war  in  August, 
1 91 4,  a  credit  of  $50,000,000  was  at  once  voted. 

Private  Bill  Legislation.  Of  extreme  importance 
in  any  system  of  national  finance  is  the  procedure 
adopted  for  the  consideration  and  authorization  of 
projects  involving  public  expenditures  which  are  for  the 
benefit  of  special  localities.  These  measures,  as  is  well 
known,  furnish  in  France  and  the  United  States  abun- 
dant opportunity  for  "log-rolling"  among  the  members 
of  the  legislature  and  for  what  has  come  to  be  known 
as  "pork-barrel"  legislation.  In  England,  for  reasons 
which  will  be  later  discussed,  this  evil  has  been  almost 
entirely  avoided.  It  may  be  here  said,  however,  that 
these  reasons  depend  in  part  upon  the  peculiar  relation- 
ship in  which  members  of  Parliament  stand  towards 
their  respective  constituencies  and  partly  upon  the 
admirable  procedure  which  the  Parliament  has  adopted 
for  the  consideration  of  what  are  known  as  "Private 
Bills." 

In  Canada  a  private  bill  procedure  has  been  adopted 
which  is  modeled  upon  that  of  the  mother  country,  but 
which,  in  its  operation  at  least,  does  not  work  so 
efficiently  as  does  the  English  system  with  regard  to  the 
prevention  of  extravagant  and  unnecessary  expenditures 

124 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

for  the  special  benefit  of  particular  localities.  Thus  the 
Canadian  procedure  provides  that  all  private  bills  shall 
be  based  upon  petitions  stating  the  purposes  aimed  at; 
and  that  they  shall  be  referred,  after  the  second  reading, 
to  large  standing  committees  to  which  are  entrusted  the 
essentially  judicial  function  of  taking  evidence,  hearing 
arguments,  and  rendering  judgments  as  to  the  merits 
of  the  proposals  submitted  to  them.  All  persons  whose 
interests  can  be  in  any  way  affected  by  the  projects  pro- 
posed must  receive  notice  and  be  granted  the  oppor- 
tunity to  appear  and  present  their  evidence  or  argu- 
ments as  to  whether  the  bills  should  be  passed.  The  un- 
fortunate practice  is,  however,  permitted  of  allowing 
members  of  the  Parliament  to  take  charge  of  private 
bills  for  the  purpose  of  obtaining  their  favorable  con- 
sideration in  the  House  and  in  committee.  This  is 
directly  counter  to  the  English  usage  which  deems  it 
highly  improper  that  a  member  should  in  any  way, 
directly  or  indirectly,  engage  in  the  promotion  of  any 
measure  of  a  private  character.  In  England,  also, 
private  bills  are  sent  to  small  committees  and  it  would 
seem  likely  that  by  this  means  a  more  nearly  judicial 
consideration  by  them  is  secured  than  is  obtained  at  the 
hands  of  the  larger  Canadian  committees.  Another 
divergence  from  the  English  practice,  which  is  prob- 
ably unfortunate,  is  the  Canadian  practice  which,  though 
denying  to  ministers  the  right  to  initiate  or  promote 
private  bill  legislation,  permits  them  to  sit  on  private 
bill  committees  in  the  Commons. 

It  may  also  be  added  that  at  times  bills  essentially 
private  in  character  are  received  and  treated  as  public 
bills  and  thus  the  requirements  of  private  bill  procedure 
avoided. 

125 


THE  CANADIAN  BUDGETARY  SYSTEM 

It  might  seem  from  a  reading  of  the  sections  of  the 
British  North  America  Act,  which  enumerate  the  ex- 
clusive legislative  powers  of  the  Provinces  and  of  the 
Dominion,  that  no  great  opportunity  is  given  for  the 
enactment  by  the  Dominion  of  local  or  private  bills. 
In  fact,  however,  there  has  been  given  a  liberal  con- 
struction to  the  authority  of  the  Dominion  Parliament 
to  "m'ake  laws  for  the  peace,  order,  and  good  govern- 
ment of  Canada  in  relation  to  all  matters  not  coming 
within  the  classes  of  subjects  of  this  act  assigned  ex- 
clusively to  the  legislatures  of  the  Provinces."  Then 
too,  as  in  the  United  Sta)tes,  the  authority  of  the 
Dominion  government  to  regulate  foreign  and  inter- 
provincial  commerce  has  furnished  constitutional  war- 
rant for  the  exercise  of  extensive  national  powers.  The 
specific  legislative  powers  granted  to  the  Dominion  by 
the  Act  of  1867,  especially  those  relating  to  trade  and 
commerce,  banking,  etc.,  have  also  permitted  the 
authorization  of  many  public  works  to  be  constructed 
at  Dominion  expense,  and  made  possible  the  granting  of 
Dominion  articles  of  incorporation  to  banking  and  other 
companies. 

Role  of  the  Opposition  in  Canadian  Budget  Prac- 
tice. It  is  a  truism  which  needs  but  little  elaboration 
that  the  existtence  of  an  effective  opposition  is  an  essen- 
tial factor  to  the  successful  working  of  any  system  of 
party  government. 

This  need  has  been  fully  appreciated,  if  not  realized 
in  practice,  in  Canada. 

Under  our  system  of  government  an  opposition  is 
a  necessity.  Under  our  system  a  party  is  necessary, 
and  that  an  opposition  is  as  necessary  as  a  govern- 
ment is  a  proposition  which  no  one  who  is  acquainted 

126 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

with  the  history  of  parliamentary  government  will 
deny.  With  all  the  evils  which  attend  parliamentary 
government,  it  has  been  acknowledged  by  one  of  the 
greatest  writers  on  that  subject  that  an  opposition 
is  a  necessity.  Let  me  read  what  was  said  by  Sir 
Thomas  Erskine  May  as  to  the  rights  and  duties  of 
an  opposition.  After  speaking  of  the  evils  that  neces- 
sarily spring  from  party  government,  and  deploring 
those  evils,  he  goes  on  to  speak  of  the  opposition: 

"But,  on  the  other  hand,  we  find  that  government, 
without  party  is  absolutism;  that  rulers,  without 
opposition,  may  be  despots.  We  acknowledge,  with 
gratitude,  that  we  owe  to  party  most  of  our  rights 
and  liberties.  .  .  .  We  perceive  that  an  opposition 
may  often  serve  the  country  far  better  than  a  min- 
istry, and  that,  where  its  principles  are  right,  they 
will  prevail.  By  argument  and  discussion  truth  is 
discovered,  public  opinion  is  expressed,  and  a  free 
people  are  trained  to  self  government.  We  feel  that 
party  is  essential  to  representative  institutions. 
Every  interest,  principle,  opinion,  theory  and  senti- 
ment finds  expression.  The  majority  governs,  but  j 
the  minority  is  never  without  sympathy,  representa- 
tion and  hope.''^ 

There  are  important  functions  to  be  performed  not 
only  by  those  who  are  entrusted  with  the  public 
confidence,  or  with  the  royal  confidence  for  the  time 
being,  but  also  by  those  who  represent  in  the  Legis- 
lature, Her  Majesty's  Opposition.  Perhaps  one  of 
the  most  important  functions  that  an  Opposition  per- 
forms is  the  careful  criticism  and  amendment  of  those 
measures  which  are  from  time  to  time  submitted  to 
us  by  the  Government.  The  Opposition,  also,  where 
the  principles  of  parliamentary  government  are  fairly 
carried  out,  are  enabled  to  exercise  a  wholesome 
check  and  control  over  the  exercise  of  patronage  and 

'  Mr.  Flynn— Can.  Hansard,  1890,  p.  1872. 

127 


THE  CANADIAN  BUDGETARY  SYSTEM 

the  expenditure  of  public  moneys.  In  fact,  the  Gov- 
ernment is  again  and  again  importuned  by  its  friends 
to  make  expenditures  and  appointments  which  can 
scarcely  be  justified  on  the  ground  of  public  necessity; 
and  the  vigilant  exercise  of  supervision  by  an  Oppo- 
sition, where  fair  play  is  given  to  the  discharge  of  its 
functions  enables  it  to  strengthen  the  hands  of  the 
Government  in  resisting  pretensions  that  are  not 
capable  of  justification  on  the  grounds  of  public 
policy  or  public  necessity." 

The  present  Premier  of  Canada  once  said  that  "a 
Government's  strength  was  to  be  measured  by  its  power 
of  resistance  to  the  demands  for  expenditure  by  camp 
followers  and  partisans."  The  chances  of  its  refusing 
appropriations  for  improper  objects  are  greatly  im- 
proved, however,  whenever  the  opposition  party  is  well 
represented  in  the  legislature. 

As  a  means  of  making  the  opposition  more  effective, 

the  Dominion  Parliament  on  July  17th,  1905,  enacted 

\  a  statute  ^  granting  ''to  the  member  occupying  the  recog- 

\  nized  position  of  Leader  of  the  Opposition  in  the  House 

lof  Commons"  the  same  salary  as  allowed  a  Cabinet 

^Minister.     In  the  course  of  the  debate  on  this  unique 

piece  of  legislation,  it  was  said  : 

I  notice  that  it  is  stated  in  some  quarters  that  it  is 
both  novel  and  illogical  for  Parliament  to  pay  any 
remuneration  above  the  sessional  indemnity  to  the 
recognized  leader  of  the  opposition.  .  .  .  Under  the 
constitution  of  the  mother  country,  under  the  law 
and  the  constitution,  there  is  no  such  office  recog- 
nized as  Prime  Minister,  no  such  office  recognized 
as  leader  of  the  opposition,  but  under  the  usages  of 
our  constitutional  system  the  Prime  Minister  and  the 

1  Mr.  Mills — Can.  Hansard,  1890,  p.  i860. 
24-5  Edward  VII,  Chap.  43,  Sec.  2. 

128 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

leader  of  the  opposition  are  important  factors  in  the 
public  life  of  the  country.  In  Canada  the  existence 
of  a  Prime  Minister  is  recognized  by  our  statutes, 
because  you  find  under  the  revised  statutes  that  the 
First  Minister  is  to  get  $i,ooo  (now  $5,000)  more 
than  the  other  members  of  the  cabinet.  I  find  also 
that  we  recognize  the  existence  of  the  leader  of  the 
opposition  under  our  constitutional  system  in  Canada 
by  the  fact  that  we  appropriate  in  this  parliament 
every  year  a  certain  amount  of  public  funds  for 
clerical  services  for  the  leader  of  the  opposition. 
Therefore,  there  is  in  that  case  a  recognition  not  only 
of  the  Prime  Minister,  as  such,  in  Canada,  but  also 
of  the  existence  of  the  leader  of  the  opposition,  and 
in  Ontario  in  the  estimates  of  1905,  it  is  expressly 
stated  that  a  certain  amount  of  money  shall  be  given 
every  year  for:  Clerks  of  committees,  secretary  to  the 
Speaker,  and  leader  of  the  opposition  for  salaries 
$5,000. 

That  is  a  distinct  recognition  of  the  position  of 
leader  of  the  opposition  in  the  great  province  of 
Ontario.  Then  in  that  province  also  by  referring  to 
the  Revised  Statutes  of  Ontario,  Vol.  I,  Chapter  8, 
sections  40  and  41,  it  will  be  seen  that  in  the  case  of 
elections  there  are  circumstances  in  which  the  certifi- 
cate^ must  be  signed  by  the  leader  of  the  opposition 
in  Ontario.^ 

In  giving  this  day  an  indemnity  to  the  recognized 
person  who  occupies  the  position  of  leader  of  the 
opposition,  I  do  not  admit  that  we  are  making  a 
departure  from  our  system  of  constitutional  govern- 
ment ;  I  contend  that  we  are  simply  coming  to  a  new 
stage  in  the  development  of  constitutional  govern- 
ment. It  is  a  strange  fact,  -but  it  is  a  fact  which  is 
known  to  everybody  that  the  very  basis  of  our  system 

1  Waiving  requirement  for  new  registration  of  voters  in  cases  of 
by-elections. 

2  Mr.  Stockton— Can.  Hansard,  1905,  p.  9728. 

129 


y 


THE  CANADlxVN  BUDGETARY  SYSTEM 

of  constitutional  government  is  that  the  cabinet  has 
no  recognized  position  under  the  law.  The  system 
has  been  gradually  evolved  in  the  course  of  ages  by 
the  nation  which  has  been  the  head  and  front  and 
mother  of  all  constitutional  parliaments  everywhere. 
But  in  Great  Britain  it  so  happens  that  the  men  who 
are  engaged  in  the  task  of  legislating  for  the  nation 
all  belong  to  a  class  w^hich  we  have  not  in  this  coun- 
try; that  is  to  say  they  are  men  of  leisure  or  of  means; 
we  are  all  bound  to  work  for  the  bread  of  every  day 
and  we  must  recognize  this  and  are  simply  recog- 
nizing it.  The  leader  of  the  opposition  under  our 
system  is  just  as  much  a  part  of  the  constitutional 
system  of  government  as  the  Prime  Minister  himself. 
We  acknowledge  that  it  is  better  for  the  country, 
that  it  is  indeed  essential  for  the  country  that  the 
shades  of  opinion  which  are  represented  on  both  sides 
of  this  House  should  be  placed  as  far  as  possible  on 
a  footing  of  equality  and  that  we  should  have  a  strong 
opposition  to  voice  the  views  of  those  who  do  not 
think  wnth  the  majority,  and  moreover  that  we  should 
have  that  legitimate  criticism,  not  only  legitimate 
criticism,  but  necessary  criticism  which  is  essential  to 
good  government  in  any  land.  I  have  thought  for  a 
long  time  that  it  is  not  fair  that  the  person  who  holds 
the  position  of  leader  of  the  opposition  should  be 
called  upon  to  give  his  services  to  the  country  without 
any  remuneration  at  all.^ 

This  is  but  a  further  evidence  of  the  development 
of  our  system  of  responsible  government.  We  do  not 
doubt  for  a  moment  that  the  leader  of  the  opposition 
has  great  labors  to  perform.  We  who  watch  the  man, 
whoever  he  may  be,  who  occupies  that  position,  from 
day  to  day  know  that  he  is  obliged  to  be  most  diligent 
and  watchful  and  that  he  is  no  less  responsible  in 
the  way  of  attendance  on  the  House  than  apy  cabinet 
minister  and  that  he  has  to  devote  to  his  public  duties 

1  Sir  Wilfrid  Laurier — Can.  Hansard,  1905,  p.  9729. 

130 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

as  much  time  as  any  minister.  Even  out  of  session 
he  has  large  and  important  responsibiHties  which 
under  our  system  of  government  seem  to  be  necessary 
for  the  working  out  of  our  own  government/ 

If  it  be  accepted  that  members  of  the  Opposition  have 
certain  duties  to  perform  and  that  they  should  devote 
their  talents  and  energies  to  help  perfect  by  intelligent 
and  useful  comment  the  legislation  of  the  country,  they 
should  be  given  free  scope  for  the  carrying  out  of  their 
functions.  Considering  that  there  can  be  no  good  gov- 
ernment without  opposition  criticism,  it  can  only  be 
termed  strange  that  Canadian  party  leaders  have  not 
taken  more  steps  to  make  such  criticism  effective.  Yet, 
as  will  be  pointed  out  in  a  later  chapter,  we  shall  see 
them  countenancing  a  course  of  procedure  at  the  ses- 
sions of  the  Public  Accounts  Committees  which  prevents 
any  thorough  investigation  into  government  expendi- 
tures. This  policy  is  all  the  more  short-sighted  for  the 
reason  that  there  is  a  certain  tendency  in  all  govern-  j  \^ 
ments  to  become  lax  or  even  corrupt  after  they  have 
been  in  power  for  a  considerable  interval.  If  the 
Opposition  are  allowed  full  rein  to  their  investigations 
there  is  greater  likelihood  that  improper  expenditures 
will  be  discovered  at  the  outset.  This  is  particularly 
true  of  the  expenditures  of  the  Public  Works  Depart- 
ment which  has  been  termed  "the  great  spending  de- 
partment, the  possible  great  jobbery  department,  the  de- 
partment that  can  make  or  ruin  a  government."  ^ 

On  account  mainly  of  this  limitation  of  the  most  im- 
portant duty  of  the  Opposition,  the  political  pendulum  in 

1  Hon.   Mr.  Fielding— Can.   Hansard,   1905,  p.  9730. 

2  Hon.  Alexander  Mackenzie,  letter  of  April  2^,  i87S- 


THE  CANADIAN  BUDGETARY  SYSTEM 

Canada,  in  the  Provinces  especially,  has  been  apt  to 
swing  with  extreme  violence  from  one  side  to  the  other. 
The  history  of  the  late  conservative  Government  in 
British  Columbia  is  a  case  in  point.  Originally  elected 
as  a  reform  administration,  it  rigorously  cut  down  ex- 
penditure at  first  and  enforced  economy  in  all  branches 
of  the  public  service.  Later  on,  with  no  opposition 
party  of  any  moment  to  act  as  a  damper,  the  Govern- 
ment threw  caution  to  the  winds  and  embarked  on  a 
policy  of  lavish  expenditures.  Many  irregularities 
having  come  to  light,  the  Government  was  swept  from 
power  in  the  election  of  1916.  In  place  of  securing  only 
two  out  of  a  total  of  forty-seven  districts  as  previously, 
the  Opposition  carried  all  but  ten  districts  at  the  last 
election.  Possessing  -such  an  overwhelming  majority 
and  faced  with  a  numericallv  weak  and  thorousfhlv  dis- 
credited  Opposition,  the  new  Government,  composed  of 
the  members  of  the  former  Opposition,  may  succumb  in 
time  to  the  same  temptations  which  wrecked  the  lately 
dismissed  administration  and  may  in  turn  be  dismissed 
for  improperly  handling  the  provincial  finances. 

As  the  Opposition  in  Canada  is  prevented  from 
properly  investigating  past  expenditures,  its  activities, 
as  far  as  budget  procedure  is  concerned,  are  confined  to 
a  criticism  of  proposed  government  outlays  as  revealed 
in  the  Estimates  submitted  to  Parliament.  The  lines 
which  this  criticism  should  .follow  have  been  described  as 
follows : 

Where  an  opposition  are  not  able  to  get,  within  a 
reasonable  time  and  without  unduly  protracting  the 
session,  information  which  would  enable  them  to 
discriminate  between  hundreds  of  items  brought 
down  to  this  House,  when  they  are  unable  to  get 

132 


PARLIAMENTARY  ACTION  UPON  ESTIMATES 

information  which  would  put  them  in  the  same  posi- 
tion for  forming  an  opinion  that  the  government  are 
in,  the  proper  duty  for  an  opposition  is  to  protest 
against  excessive  expenditure,  to  throw  upon  the 
government  the  responsibility  for  making  it,  knowing 
as  they  dp  that  the  government  have  within  their 
power  the  means  of  reducing  that  expenditure  by 
eliminating  from  it  items  which  are  less  worthy  of 
public  appropriation  than  those  which  are  necessary 
to  be  made.  That  is  the  view  which  has  been  put 
forward  in  the  English  House  of  Commons  as  a  sound 
principle,  that  an  opposition  in  protesting,  as  we  have 
protested,  against  undue  expenditure  have  discharged 
their  duty  without  deaHng  in  detail  with  the  particu- 
lar items  of  the  expenditure  brought  down  by  the 
government/ 

In  conclusion,  the  following  extract  may  profitably  be 
quoted  on  the  question  whether  or  not  an  Opposition 
should  content  itself  with  a  mere  criticism  of  the  govern- 
ment's Estimates : 

We  are  told  by  the  Minister  of  Finance  of  this 
country  that  because  the  opposition  did  not  divide  the 
House  on  an  estimate,  therefore  they  consented  to  it. 
Let  him  read  the  speech  of  Mr.  Chamberlain  where 
he  shows  the  absurdity  of  such  an  argument,  let  him 
read  the  speeches  of  leading  statesmen  in  England  \  / 
on  the  same  subject,  and  he  will  find  that  they  hold  j 
the  principle  that  the  duty  of  an  opposition  is  merely 
criticism,  not  to  divide  the  House  on  an  item,  but  to 
leave  the  entire  responsibility  with  the  government 
who  propose  it.  If  we  do  not  divide  the  House  upon 
it,  that  is  no  reason  why  we  should  be  accused  of 
supporting  the  vote.  .  .  .  Our  opposition  is  not  so 
much  for  the  purpose  of  influencing  the  government 
as  for  the  purpose  of  influencing  the  country,  because 

1  Mr.  Borden— Can.  Hansard,  1902,  p.  4821. 


THE  CAxNADlAN  BUDGETARY  SYSTEM 

w^  know  we  are  in  a  minority  in  this  House.  .  .  . 
The  position  we  occupy  as  a  party  is  that  for  every 
item  in  the  estimates  the  government  of  the  day  are 
responsible,  and  that  our  functions  are  confined  to 
criticising  an  item  we  object  to/ 

^  Mr,  Haggart — Can.  Hansard,  1902,  p.  1271. 


134 


CHAPTER  VIII 

ORGANS  AND  OFFICERS  FOR  THE  ADMINIS- 
TRATION OF  THE  FINANCES 

In  broad  outlines  the  law  regarding  the  custody,  dis- 
bursement and  audit  of  public  funds  is  to  be  found  in  the 
two  statutes:  "An  Act  Respecting  the  Department  of 
Finance  and  the  Treasury  Board,"  and  "An  Act  Re- 
specting the  Public  Revenue,  the  Raising  of  Loans 
Authorized  by  Parliament,  and  the  Auditing  of  the  Pub- 
lic Accounts,"  the  short  titles  of  which  are  "Department 
of  Finance  and  Treasury  Board  Act,"  and  "Consolidated 
Revenue  and  Audit  Act."' 

Before  proceeding  to  a  consideration  of  the  procedure 
employed  by  the  Canadian  government  for  the  receipt,   j 
custody,  issue,  expenditure  and  audit  of  public  funds, 
mention  should  first  be  made  of  the  several  organs  and   \^' 
officers  that  have  been  created  by  the  Dominion  for  the 
handHng  of  these  affairs. 

Parliament  as  the   Fund   Raising  and   Granting 
Authority.     At  the  top  of  the  system  is,  of  course, 
Parliament  itself.     It  is  the  body  which  prescribes  what     \ 
revenues  shall  be  collected  and  to  what  purposes  the     ^ 
money  so  raised  shall  be  applied.     Its  function,  how- 
ever, does  not  cease  here.     It  is  its  duty  to  see  that  the 
revenues  authorized  to  be  collected  shall  be  duly  collected   |  y 
and  deposited  in  the  public  treasury,   that  the  funds 
granted  by  it  shall  be  expended  for  the  purposes  specified 
by  it  and  for  those  purjwses  only,  and  that  a  due  account- 
ing is  had  of  all  moneys  so  collected  and  expended.     For 

iThe  text  of  these  acts  is  given  in  Appendices  i  and  2.  They 
constitute  Chapters  23  and  24  of  the  Revised  Statutes  of  Canada,  1906. 

135 


y 


•^1 


/' 


THE  CANADIAN  BUDGETARY  SYSTEM 

this  purpose  it  has  made  provision  for  two  officers  or 
organs,  the  Auditor  General  and  the  Committee  on  Ac- 
counts, the  functions  and  duties  of  which  will  hereafter 
be  more  specifically  described. 

The  Governor  in  Council.  Next  in  authority  is  the 
Governor  in  Council.  By  this  term  is  meant  the  Cabinet 
sitting  formally  for  the  taking  of  action  and  especially 
the  issuance  of  orders  known  as  "Orders  in  Council"  in 
pursuance  of  authority  vested  in  it  by  act  of  Parliament 
or  Royal  Prerogative.^  A  reading  of  the  two  acts  re- 
specting the  Department  of  Finance  and  the  Treasury 
Board,  and  the  Public  Revenue  and  Auditing  of  Public 
Accounts,  which  are  reproduced  in  the  Appendices, 
shows  that  Parliament  has  by  formal  act  vested  in  this 
body  exceedingly  broad  powers  in  respect  to  the  deter- 
mination of  how  the  public  revenue  shall  be  collected, 
cared  for  and  disbursed. 

Thus,  for  example,  in  respect  to  the  management  of 
the  public  debt  the  act  prescribes  that : — 

The  Governor  in  Council  may  from  time  to  time — 

(a)  make  such  regulations  as  he  deems  necessary 
for  the  management  of  the  public  debt  of  Canada  and 

\  the  payment  of  the  interest  thereon ;  and 

(b)  subject  to  the  provisions  of  the  two  next  fol- 
lowing sections,  provide  for  the  creation  and  manage- 
ment of  a  sinking  fund  or  other  means  of  securing 
the  repayment  of  any  loans  raised  under  the  authority 
of  ParHament ;  and 

(c)  appoint  one  or  more  fiscal  agents  of  Canada  in 
the  City  of  London,  England,  or  elsewhere,  and  agree 

1  Though  the  term  employed  is  "Governor  in  Council"  it  is  hardly 
necessary  to  say  that  the  Governor  does  not  personally  participate 
in  any  way  in  proceedings  of  the  Council  or  Cabinet.  The  phrase  is 
employed  since  all  the  action  taken  is  taken  in  his  nartie  in  the  same 
way  that  the  acts  of  the  British  Cabinet  are  performed  in  the  name 
of  Crown. 

136 


ORGANS  AND  OFFICERS 

with  them  for  negotiating  loans,  and  for  paying  the 
interest  on  the  pubUc  debt,  and  for  other  services 
connected  with  the  management  of  the  said  debt;  and 
(d)  pay  the  sums  necessary  to  provide  such  sink- 
ing fund  or  other  means  as  aforesaid,  and  such  com- 
pensation, out  of  the  Consolidated  Revenue  Fund. 

Again,  in  respect  to  the  collection  of  the  revenue  it  is 
provided : — 

The  Governor  in  Council  may,  from  time  to  time, 
determine  what  officers  or  persons  it  is  necessary  to 
employ  in  collecting,  managing  or  accounting  for  the 
revenue,  and  in  carrying  into  effect  the  laws  there- 
unto relating,  or  for  preventing  any  violation  of  such 
laws;  and  may  assign  their  names  of  office,  and  such 
salaries  or  pay  for  their  labours  and  responsibility 
in  the  execution  of  the  duties  of  their  respective  offices 
and  employments,  as  to  the  Governor  in  Council 
seems  reasonable  and  necessary,  and  may  appoint  the 
times  and  manner  in  which  the  same  shall  be  paid; 
Provided  that  no  such  officer  so  appointed  shall 
receive  a  higher  annual  salary  than  is  allowed  in  his 
case  by  any  Act  of  the  Parliament  of  Canada  then  in 
force  respecting  the  Civil  Service  generally;  nor  shall 
any  such  salary  be  paid  until  voted  by  Parliament. 

The  Governor  in  Council  may,  from  time  to  time — 

(a)  make  such  divisions  of  Canada  into  parts, 
revenue  districts  or  otherwise,  as  are  required  with 
regard  to  the  collection  or  management  of  the  reve- 
nue; and 

(b)  assign  the  officers  or  persons  by  whom  any 
duty  or  service  relative  to  any  such  purpose  shall  be 
performed  within  or  for  any  such  district  or  division, 
and  the  places  within  the  same  where  such  duty  or 
service  shall  be  performed;  and 

(c)  make  all  such  regulations  concerning  such 
officers  and  persons,  and  the  conduct  and  manage- 
ment of  the  business  to  them  entrusted,  as  are  con- 

137 


^ 


\J' 


THE  CANADIAN  BUDGETARY  SYSTEM 

sistent  with  the  law,  and  as  he  deems  expedient  for 
carrying  it  into  effect,  in  the  manner  best  adapted 
to  promote  the  public  good. 

There  are  a  large  number  of  other  provisions  scat- 
tered through  the  Consolidated  Revenue  and  Audit  Act 
vesting  power  in  the  Governor  in  Council  in  respect  to 
the  administration  of  the  finances  of  the  nation.  The 
sections  quoted,  however,  serve  to  illustrate  the  extent 
to  which  the  Canadian  Parliament  has  departed  from 
the  principle  usually  followed  by  the  American  Con- 
gress, of  seeking  to  prescribe  in  detail  through  statute 
how  administrative  services  shall  be  organized  and  con- 
ducted. The  superior  flexibility  thus  given  to  the 
administration  system  and  its  ability  to  meet  new  con- 
ditions as  they  arise  need  not  be  commented  upon. 

In  considering  these  powers  of  the  Canadian  Cabinet 
note  should  also  be  taken  of  the  powers  conferred  upon 
the  Treasury  Board,  an  organ  about  to  be  described 
since  that  body  is  in  effect  but  a  committee  of  the  Cabinet 
for  finance  matters. 

The  Treasury  Board.     The  establishment  of  this 

important  body  is  provided  for  by  the  following  sections 

of  the  Department  of  Finance  and  Treasury  Board  Act. 

There  shall  be  a  Board  to  be  called  the  Treasury 

,     .    Board,  consisting  of  the  Minister  of  Finance  and  any 

\J     ;    Rye  of  the  ministers  belonging  to  the  King's  Privy 

i    Council  for  Canada,  to  be  nominated  from  time  to 

time  by  the  Governor  in  Council. 

The  Treasury  Board  shall  act  as  a  committee  of 
the  King's  Privy  Council  for  Canada,  on  all  matters 
relating  to  finance,  revenue  and  expenditure,  or  public 
accounts,  which  are  referred  to  it  by  the  Council,  or 
to  which  the  Board  thinks  it  necessary  to  call  the 
attention  of  the  Council,  and  shall  have  power  to 

138 


ORGANS  AND  OFFICERS 

require  from  any  public  department,  board,  officer,  or 
other  person,  bound  by  law  to  furnish  the  same  to  the 
Government,  any  account,  return,  statement,  docu- 
ment, or  information  which  the  Board  deems  requi- 
site for  the  due  performance  of  its  duties. 

The  Minister  of  Finance  shall  be  the  Chairman  of 
the  Treasury  Board,  and  the  Deputy  Minister  of 
Finance  shall  be  ex  officio  the  Secretary  thereof,  and 
through  him  the  Board  shall  communicate  with  any 
public  department,  officer,  or  other  person. 

A  plan  of  account  books  and  accounts,  adapted  to 
the  requirements  of  each  department  or  branch  of 
the  public  service,  in  order  to  exhibit  in  convenient 
form  the  whole  of  the  receipts  and  payments  in 
respect  of  each  rate,  shall  be  designed  under  the 
superintendence  of  the  Treasury  Board;  and  the 
Governor  in  Council  may,  on  report  from  the  Treas- 
ury Board,  prescribe,  from  time  to  time,  the  manner 
in  which  each  Department  of  the  public  service  shall 
keep  its  accounts. 

The  Treasury  Board  may  direct  any  officer  or 
person  employed  in  collecting,  managing  or  account- 
ing for  any  branch  of  the  revenue,  to  keep  any  books 
or  accounts  which  it  deems  advisable  to  direct  to  be 
kept  for  the  purpose  of  obtaining  and  furnishing  any 
statistical  information  concerning  the  trade  or  com- 
merce of  Canada,  the  public  works  thereof,  or  other 
matters  of  public  interest. 

These  duties  are  materially  supplemented  by  pro- 
visions contained  in  the  Consolidated  Revenue  and 
Audit  Act  which  makes  constant  allusion  to  action  that 
is  to  be  taken  by  the  Treasury  Board.  This  act  thus 
provides ;  that  every  public  officer  into  whose  hands  come 
any  public  moneys,  whether  in  the  nature  of  revenue  or 
fees  of  office,  or  whose  duty  it  is  to  pay  out  public  moneys 
shall  render  an  account  of  such  receipts  and  payments 

139 


THE  CANADIAN  BUDGETARY  SYSTEM 

to  the  Auditor  General  at  such  times  and  in  such  form 
as  the  Treasury  Board  shall  prescribe;  that  the  Treasury 
Board  may  alter  the  time  at  or  to  which  any  accountant 
for  public  moneys,  public  officer,  corporation  or  institu- 
tion is  required  to  render  any  account  or  to  make  may 
return  whenever  in  its  opinion  such  alteration  will  facili- 
tate the  correct  preparation  of  the  public  accounts  or 
estimates  for  the  fiscal  year;  that  the  Treasury  Board 
may,  from  time  to  time,  appoint  the  times  and  mode  in 
which  any  officer  or  person  employed  in  the  collection 
or  management  of,  or  the  accounting  for,  any  part  of 
the  revenue,  shall  account  for  and  pay  over  the  public 
moneys  which  come  into  his  hands  and  determine  the 
times  and  mode  in  which,  and  the  officer  by  whom,  any 
licenses  on  which  any  duty  is  payable  are  to  be  issued; 
and  that  the  Minister  of  Customs,  the  Minister  of  In- 
land Revenues,  the  Postmaster  General  and  all  other  of- 
ficers charged  with  the  receipt  of  public  moneys  shall 
render  daily  account  to  the  Auditor  General  of  the  money 
so  collected  and  deposited  in  bank  to  the  credit  of  the 
Minister  of  Finance  and  Receiver  General  in  such  form 
as  the  Treasury  Board  shall  prescribe. 

It  will  be  seen  from  these  provisions  that  the  Treasury 
Board  is  the  body  to  which  is  entrusted  the  authority  to 
prescribe  the  whole  system  of  government  accounting 
and  reporting,  subject  only  to  certain  general  provisions 
which  are  contained  in  the  Consolidated  Revenue  and 
Audit  Act.  This  body  thus  has  ample  power  to  pre- 
scribe and  enforce  a  system  of  accounting  and  reporting 
that  shall  be  uniform  throughout  all  government  ser- 
vices. It  does  not  appear,  however,  that  this  authority 
has  been  affirmatively  exercised,  with  the  result  that  the 
several  services  in  large  part  determine  for  themselves 

140 


ORGANS  AND  OFFICERS 

how  their  accounts  shall  be  kept  and  their  reports  pre- 
pared. 

Another  most  important  function  of  the  Treasury 
Board  is  that  of  acting  as  a  board  for  passing  upon 
appeals  from  decisions  of  the  Auditor  General  with  \  Y 
reference  to  both  the  issue  of  money  from  the  Treasury 
and  the  propriety  or  legality  of  disbursements.  This 
function,  however,  is  one  which  it  is  better  to  describe 
when  the  procedure  employed  in  making  issues  from  the 
treasury  and  in  auditing  accounts  of  disbursements  is 
considered. 

Finally,  mention  should  be  made  of  the  fact  that  the 
Treasury  Board  has  been  given  cer'tain  duties  with 
reference  to  the  administration  of  the  systems  of  savings  |  ^.y 
banks,  penny  banks  and  insurance,  and  that,  in  its  / 
capacity  as  a  committee  of  the  Cabinet,  it  plays  an  im- 
portant role  in  the  way  of  relieving  the  latter  body  of 
many  details  of  administration.  To  it  come,  for  ex- 
ample, such  matters  as  proposed  appointments  and  pro- 
motions, questions  of  salaries,  pensions,  allowances  and 
leaves  of  absence.  In  these  cases  the  decisions  of  the 
board  are  not  final,  but  must  be  reported  to  the  Council 
for  its  approval.  It  has  been  suggested  that  many  of 
these  duties  are  not  important  enough  to  require  the 
personal  attention  of  the  entire  Cabinet  or  of  a  committee 
of  six  of  its  members,  and  that  their  performance  might 
better  be  handed  over  to  the  heads  of  the  departments 
concerned,  or,  wath  reference  to  promotions  and  appoint- 
ments, to  a  specially  constituted  board.^ 

Department  of  Finance.     For  the  actual  conduct  of 
financial  affairs  provision  is  made  for  a  service  known 

1  See  report  by  Sir  George   Murray  on   the  Organization   of  the 
Public  Service  of  Canada,  1912,  p.  9. 


^y 


THE  CANADIAN  BUDGETARY  SYSTEM 

as  the  Department  of  Finance.  The  duties  of  this  de- 
partment, as  set  forth  in  the  Department  of  Finance  and 
Treasury  Board  Act,  are  to  have  "the  supervision,  con- 
trol and  direction  of  all  matters  relating  to  the  financial 
aflPairs  of  public  accounts,  revenue  and  expenditure  of 
Canada,  which  are  not,  or  in  so  far  as  they  are  not,  by 
law,  or  by  order  of  the  Governor  in  Council,  assigned 
to  any  other  department  of  the  Government,  and  such 
other  duties  as  are,  from  time  to  time,  assigned  to  it  by 
the  Governor  in  Council." 

At  the  head  of  this  department  is  placed  an  official 
usually  known  as  Minister  of  Finance,  but  whose  full 
title  is  Minister  of  Finance  and  Receiver  General.  He 
is  appointed  by  the  Governor  General  in  Council  and 
holds  office  during  pleasure;  that  is,  of  course,  as  long  as 
the  political  party  to  which  he  belongs  remains  in  power. 
He  is,  in  fact,  a  high  political  officer  and  one  of  the  most 
important  members  of  the  Canadian  Cabinet.  His 
duties  are  primarily  political.  Only  in  relatively  slight 
degree  does  he  concern  himself  with  the  actual  work  of 
administering  the  afifairs  of  his  department. 

The  real  administrative  head  of  the  Finance  Depart- 
ment is  the  Deputy  Minister  of  Finance  and  Receiver 
General,  who  is  likewise  appointed  by  the  Governor 
General  in  Council  and  holds  office  during  pleasure. 
The  act  thus  provides : 

The  Deputy  Minister  of  Finance  shall,  under  the 
Minister  of  Finance,  keep  the  accounts  with  the 
financial  agents  of  Canada  in  England  and  with  the 
bank  or  banks  receiving  or  paying  public  moneys,  and 
the  accounts  of  moneys  paid  for  interest  on  Canadian 
stock,  debentures  or  other  Canadian  securities. 

The  Deputy  Minister  of  Finance  shall  classify  all 
appropriations  of  pubHc  moneys  and  keep  posted  up 

142 


ORGANS  AND  OFFICERS 

a  book  to  be  called  the  appropriation  book,  containing 
an  account,  under  separate  and  distinct  heads,  of 
every  such  appropriation,  whether  permanent  or 
temporary,  entering  under  each  head  the  amounts 
drawn  on  account  of  such  appropriation  with  the 
dates  and  names  of  the  persons  to  whom  payments 
are  made;  and  shall,  under  the  Minister  of  Finance, 
keep  the  public  accounts  of  Canada. 

All  returns  and  statements  required  from  savings 
banks,  chartered  or  other  banks,  and  all  other  insti- 
tutions required  to  make  financial  statements  or  re- 
turns, shall,  when  no  other  provision  is  made  in  that 
behalf,  be  transmitted  to  the  Deputy  Minister  of 
Finance. 

It  will  be  seen  from  the  sections  which  have  been 
quoted  that  the  Deputy  Minister  of  Finance  is,  by 
statute,  placed  at  the  head  of  the  accounting  system  of 
the  government. 

It  is  also  provided  by  the  act  that  the  Deputy  Minister 
shall  be  ex  officio  Secretary  of  the  Treasury  Board. 

An  inspection  of  the  statutory  provisions  which  have 
been  quoted,  and  which  practically  exhaust  the  functions 
of  the  Department  of  Finance  as  laid  down  in  this 
organic  act,  indicates  that  there  is  explicitly  given  to  the 
department  no  such  controlling  authority  over  the  ex- 
penditures of  the  other  departments  as  is  exercised  by 
the  Treasury  of  Great  Britain.  It  would  indeed  be  pos- 
sible, under  the  statute,  for  a  practice  to  develop  and  a 
tradition  to  grow  up  which  would  endow  the  Finance 
Department  with  such  a  comprehensive  and  effective 
controlling  authority.  In  fact,  however,  no  such 
beneficent  centralized  directing  financial  control  has 
come  into  being  or  indeed  shown  a  tendency  to  develop. 
As  has  been  earlier  pointed  out,  the  Minister  of  Finance 

143 


^ 


THE  CANADIAN  BUDGETARY  SYSTEM 

is  given  the  opportunity  to  inspect  the  estimates  of  the 
other  departments  before  they  are  accepted  by  the 
Cabinet  for  presentation  to  Parliament,  and  this  oppor- 
tunity is  undoubtedly  made  use  of  to  urge  economies 
upon  the  other  services,  but  these  urgings  have  not  the 
weight  that  those  of  the  British  Treasury  have,  and,  at 
the  best,  in  almost  all  cases  they  relate  to  totals  rather 
than  to  specific  items.  In  other  words,  as  has  been 
earlier  pointed  out,  the  main  concern  of  the  Canadian 
Minister  of  Finance  is  to  see  that  the  total  amounts  of 
\  supply  that  it  will  be  necessary  for  the  Cabinet  to  ask  of 
1  Parliament  shall  not  be  greater  than  is  desirable  from 
the  standpoint  of  political  party  expediency. 

Though  primarily  but  a  department  for  the  handling 
of  the  bookkeeping  operations  of  the  government,  the 
Department  of  Finance  also  performs  certain  other 
duties  which  have  been  imposed  upon  it  by  statute. 
^  Thus,  for  example,  pensions,  superannuation  allowances, 
/  '  and  subsidies  to  the  Provinces  are  placed  more  or  less 
under  the  control  of  the  Finance  Department.  These, 
it  is  evident,  are  functions  largely  of  a  bookkeeping 
character.  But,  in  addition,  a  considerable  number  of 
miscellaneous  matters  have  been  imposed  upon  the  de- 
partment, as  for  example,  the  Ottawa  Improvement 
Commission,  the  National  Battlefields  Commission,  the 
Academy  of  Arts,  and  other  scientific  and  patriotic 
orders,  the  Ottawa  Branch  of  the  Royal  Mint,  etc.  It 
should  also  be  added  that  the  Comptroller  of  the  Domin- 
ion Currency  is  an  official  under  this  department  as  are 
also  the  Commissioner  and  Assistant  Commissioner  of 
Taxation. 

It  will  thus  be  seen  that  the  Canadian  Department  of 
Finance,  as  regards  its  functions  and  political  influence, 

144 


k^ 


ORGANS  AND  OFFICERS 

stands  about  midway  between  the  British  Treasury  and      {^ 
the  Treasury  Department  at  Washington.     It  has  more, 
influence  over  the  general  estimates  and  expenditures  s 
of  the  other  services  of  the  general  government  than  has  \ 
the  American  Treasury,  but  far  less  than  has  the  British 
Treasury.     It  has  more  miscellaneous  functions  than 
has  the  British  Treasury  but  less  than  the  American 
Department. 

Chartered  Banks  of  Canada  as  Custodians  of  the  S4 
Public  Funds.  For  the  actual  custody  of  the  public 
funds  use  is  made  of  the  chartered  banks  of  Canada  and 
their  many  branches.  These  banks  are  designated  by 
the  Minister  of  Finance.  The  revenue  is  collected  all 
over  the  Dominion.  Generally  speaking,  the  officers 
collecting  such  revenue,  or  having  fees  or  public  moneys 
of  any  kind  coming  into  their  hands,  are  required  to  de- 
posit such  receipts  daily  in  the  local  banks  which  have 
been  designated  by  the  Minister  of  Finance.  Upon 
doing  so  they  receive  a  receipt  in  triplicate — one  for 
the  depositor,  a  duplicate  for  his  department,  and  a 
triplicate  for  the  Receiver  General.  The  triplicate  has 
a  draft  attached  made  payable  at  par  to  the  Receiver 
General  at  its  branch  at  Ottawa  where  the  government 
account  is  kept. 

These  receipts  and  drafts  flow  in  regularly,  daily, 
throug^h  the  mails  and  are  brought  to  account  in  the 
books  of  the  Finance  Department. 

Though  paid  into  the  various  banks  throughout  the   I 
Dominion  at  the  places  of  collection,  the  general  fiscal    \  ^ 
agent  of  the  Dominion  is  the  Bank  of  Montreal,  the     » 
largest  bank  in  Canada,  and  indeed  one  of  the  largest 
on  the  continent.     Thus,  as  will  presently  appear,  expen- 
ds 


THE  CANADIAN  BUDGETARY  SYSTEM 

diture  checks  are  drawn  on  that  bank  by  the  government 
which  is  reimbursed  by  checks  in  its  favor  drawn  upon 
the  government's  balances  in  the  other  banks/     No  in- 
terest is  paid  by  the  banks  upon  the  government's  de- 
posits, and,  reciprocally,  no  charge  is  made   for  the 
services  performed  by  them  for  the  government.     There 
is  undoubtedly  opportunity  for  political  favoritism  in 
the  designation  of  banks  for  deposits  of  public  revenues, 
\  but  it  would  not  appear  that  this  opportunity  has  been 
J  '     so  greatly  abused  as  to  give  rise  to  any  serious  injustices 
^  or  charges  of  overt  graft. 

The  following  statements  from  the  "Civil  Service  of 
Canada,""  gives  further  interesting  details  regarding  the 
manner  in  which  the  current  revenues  of  the  Dominion 
are  covered  into  the  Consolidated  Fund,  and  the  current 
reports  and  statistics  relating  to  them. 

A  great  number  of  the  offices  of  the  chartered 
'  banks  in  Canada  are,  in  effect,  sub-agencies  of  the 
Finance  Department.  On  December  31,  1913,  there 
were  3,008  such  offices  doing  business.  In  each  city 
or  hamlet,  some  bank  or  banks  are  authorized  to 
accept  deposits  to  the  credit  of  the  Receiver  General. 
By  an  efficient  voucher  system  these  revenues  are 
reported,  by  civil  servants  all  over  Canada,  to  the 
Deputy  Minister  of  the  department  concerned  in 
Ottawa.      Daily    or    periodically,    each    department 

1  The  following  testimony  by  Sir  Edward  Clouston,  General  Man- 
ager of  the  Bank  of  Montreal,  is  reported  by  the  National  Monetary 
Commission  in  the  volume  entitled  "Interviews  on  the  Banking  and 
Currency  Systems  of  Canada,"  p.  154.  Q.  Do  you  have  all  the  Gov- 
ernment business?  A.  We  have  the  most  of  it,  but  a  number  of  the 
other  banks  have  small  deposits.  The  principal  account  is  kept  with 
us.  In  fact  we  are  the  Government  bankers.  Q,  You  act  as  the 
official  agent  of  the  Government?  A.  Yes;  here  and  in  London.  We 
issue  all  their  loans.  Q.  That  is  because  you  are  the  largest  bank; 
it  has  nothing  to  do  with  your  charter  conditions?"  A.  No,  simply 
because  we  have  the  Government  business." 

2  A  special  issue  of  The  Civilian,  p.  51. 

146 


ORGANS  AND  OFFICERS 

sends  a  statement  of  revenues  to  the  Department  of 
Finance,  and  by  a  system  of  drafts,  funds  deposited 
in  banks  in  remote  parts  of  Canada  are  garnered  and 
concentrated  in  the  Ottawa  branch  of  the  bank  con- 
cerned or  in  the  head  office,  if  there  be  no  branch  of 
the  bank  in  the  capital.  There  were  on  December  31, 
1913,  twenty-four  chartered  banks,  and  this  depart- 
ment employs  nineteen  of  them  for  the  purpose  of 
collecting  revenue.  A  splendid  scheme  has  been 
devised  to  facilitate  the  handling  of  the  revenue, 
which  on  some  days  amounts  to  a  million  and  a  half 
dollars.  The  congested  mass  of  documents  is  sorted, 
vouchers  made  chargeable  to  the  respective  banks, 
and  at  12:30  p.  m.  each  day  remittances  are  on  the 
v/ay  to  the  bank  in  Ottawa  by  special  messenger,  or 
by  the  mail  to  the  head  office  of  banks  not  having  an 
agency  in  Ottawa,  and  the  cash  and  statements  are 
put  through  the  various  ledgers  of  the  department. 
*  *  *  The  Expenditure  branch  issues  cheques,  upon 
proper  authorization,  for  all  the  expenditures  of  the 
Dominion,  including  repayments  of  Letter  of  Credit 
cheques.  A  record  of  the  daily  revenue  is  received 
from  the  Revenue  branch,  and  a  statement  showing 
the  amount  of  cash  to  the  credit  of  the  Receiver  Gen- 
eral in  nineteen  Canadian  banks,  and  in  the  Bank  of 
Montreal,  London,  is  placed  on  the  Deputy  Minister's 
desk  at  the  close  of  each  day's  work. 

Closely  related  to  the  two  foregoing  branches 
[Revenue  and  Expenditure]  is  the  system  that  is 
justly  the  pride  of  the  Department,  known  as  the  \  / 
"Ten  Day  Ledger."  This  system  has  been  developed 
by  a  gradual  evolutionary  process;  the  names  of 
Nutting,  Dickieson,  and  Eraser  (now  Auditor  Gen- 
eral) being  associated  with  its  establishment.  The 
scientific  efficiency  of  the  system  may  be  judged  from 
the  fact  that  three  times  in  each  month,  on  the  loth, 
20th,  and  the  last  day,  a  statement  of  the  financial 
affairs  of  the  Dominion  for  the  current  fiscal  year  is 

147 


THE  CANADIAN  BUDGETARY  SYSTEM 

placed  on  the  desk  of  the  Deputy  Minister  four  or 
five  hours  after  the  close  of  business  for  the  day. 
*  *  *  In  connection  with  this  work  there  is  kept  an 
Appropriation  Ledger,  being  a  distribution,  accord- 
ing to  appropriation,  of  all  expenditures  made  under 
parliamentary  sanction.  *  *  *  The  Department  also 
publishes  monthly  statements  in  the  ''Canadian 
Gazette,*'  such  as  assets  and  liabilities  of  the  Domin- 
ion, revenue  and  expenditure,  the  circulation  of 
Dominion  notes,  the  gold  reserve,  savings  banks' 
statements,  and  a  compilation  of  monthly  returns  of 
the  banks,  as  required  by  law. 

The  Auditor  General.     The  expenditure  of  public 
funds  involves,  as  we  have  seen,  three  distinct  opera- 
/       tions;  the  issue  from  the  public  treasury  of  funds  to 
officers  charged  with  the  payment  of  government  obliga- 
>"  tions,  the  actual  disbursement  of  these  funds  by  such 
jj^     officers,  and  the  audit  of  these  disbursements.     The  per- 
formance of,  or  control  over,  the  first  and  third  of  these 
operations  is  in  Canada  entrusted  to  an  officer  known  as 
Auditor  General. 

This  important  official  is  appointed  by  the  Governor 
"^  General,  as  the  act  declares,  ''for  the  more  complete  ex- 
amination of  the  public  accounts  of  Canada,  and  for  re- 
porting thereon  to  the  House  of  Commons."  In  fact, 
however,  he  deserves  the  title  Comptroller  and  Auditor 
General  for,  as  stated,  his  functions  extend  beyond  those 
of  audit  and  embrace  comprehensive  powers  of  control 
over  proposed  disbursements.  In  order  that  he  may 
occupy  an  independent  position,  it  is  provided  that  he 
shall  hold  office  during  good  behavior,  subject  only  to  re- 
moval by  the  Governor  General  on  address  of  the  Senate 
and  House  of  Commons.  He  is  also  made  subject  to  the 
Civil  Service  Superannuation  and  Retirement  Act,  ex- 

148 


ORGANS  AND  OFFICERS 

cept  as  to  his  tenure  of  office.  His  annual  salary,  origi- 
nally four  thousand  dollars,  is  now  five  thousand  dollars. 
It  is  provided  that  "The  Governor-General  in  Council 
shall,  from  time  to  time,  appoint  the  officers,  clerks  and 
other  persons  in  the  office  of  the  Auditor  General,  and 
may  regulate  the  numbers  and  salaries  of  the  respective 
grades  or  classes  into  which  the  said  officers,  clerks  and 
others  shall  be  divided."  But,  subject  to  approval  by 
the  Treasury  Board,  the  Auditor  General  is  given  the 
authority  to  ''make  orders  and  rules  for  the  conduct  of 
the  internal  business  of  his  office,  and  prescribe  the  regu- 
lations and  forms  for  the  guidance  of  principal  ac- 
countants and  sub-accountants  in  making  up  and  render- 
ing their  periodical  account  for  examination."  The 
Auditor  General  is  also  empowered  to  suspend  or  re- 
move from  office  any  persons  employed  in  his  office  and, 
subject  to  the  provisions  of  the  Civil  Service  Act,  to  pro- 
mote them  for  merit.  The  duties  of  this  officer  will  be 
more  specifically  described  when  we  consider  the  pro- 
cedure employed  in  making  issues  from  the  treasury  and 
in  auditing  the  accounts  of  disbursements. 


149 


CHAPTER  IX 

ISSUE  AND  DISBURSEMENT  OF  PUBLIC 
FUNDS 

Having  described  the  machinery  that  exists  for  the 
administration  of  the  financial  affairs  of  the  Dominion  it 
remains  for  us  now  to  consider  the  principles  and  pro- 
cedure employed  in  the  actual  performance  of  the  work 
to  be  done. 

Issue  of  Public  Moneys  from  the  Treasury.     As  in 

the  British,  American  and  other  constitutional  systems, 
careful  provision  is  made  that  no  money  shall  issue  from 
the  public  treasury  except  upon  the  warrant  of  some  high 
officer  whose  duty  it  is  to  see  that  no  such  issue  shall  take 
place  except  when  adequate  warrant  of  law  exists  there- 
i    for.     In  Canada   this  officer  is  the  Auditor   General. 

j  Thus  Section  42  of  the  Consolidated  Revenue  and  Audit 
Act  declares  that : 

No  cheque  for  public  money  shall  issue  except  upon 
the  certificate  of  the  Auditor  General  that  there  is 
parliamentary  authority  for  the  expenditure,  save 
only  in  the  following  cases: 

These  excepted  cases  are  two  in  number  and  are  pro- 
vided for  in  the  following  clauses  which  follow  the  one 
just  quoted. 
,    ,        (a)    If,   upon  any  application   for  a   cheque,   the 

^  \  Auditor  General  has  reported  that  there  is  no  parlia- 
mentary authority  for  issuing  it,  then  upon  the 
written  opinion  of  the  Minister  of  Justice  that  there 
is  such  authority,  citing  it,  the  Treasury  Board  may 
authorize  the  Deputy  Minister  of  Finance  to  prepare 
the  cheque,  irrespective  of  the  Auditor  Generars 
report; 

150 


ISSUE  AND  DISBURSEMENT  OF  FUNDS 

(b)  If,  when  Parliament  is  not  in  session,  any 
accident  happens  to  any  public  work  or  building 
which  requires  an  immediate  outlay  for  the  repair 
thereof,  or  any  other  occasion  arises  when  any  ex- 
penditure, not  foreseen  or  provided  for  by  Parlia- 
ment, is  urgently  and  immediately  required  for  the 
public  good,  then  upon  the  report  of  the  Minister  of 
Finance  that  there  is  no  parliamentary  provision,  and 
of  the  minister  having  charge  of  the  service  in  ques- 
tion that  the  necessity  is  urgent,  the  Governor  in 
Council  may  order  a  special  warrant  to  be  prepared, 
to  be  signed  by  the  Governor-General  for  the  issue 
of  the  amount  estimated  to  be  required,  which  shall 
be  placed  by  the  Minister  of  Finance  to  a  special 
account,  against  which  cheques  may  issue  from  time 
to  time  in  the  usual  form,  as  they  are  required. 

The  succeeding  section,  moreover,  provides  that  when 
the  Auditor  General  refuses  to  direct  the  issue  of  money 
from  the  treasury  on  grounds  other  than  that  of  par- 
liamentary authority  therefor,  an  appeal  from  his  de- 
cision lies  to  the  Treasury  Board  which  can  override  his 
decision  and  order  the  money  to  issue.  In  this  case  the 
securing  of  the  opinion  of  the  Minister  of  Justice  is  not 
required.  The  provisions  of  the  act  covering  this  mat- 
ter are  as  follows : 

If  the  Auditor  General  has  refused  to  certify  that 
a  cheque  of  the  Minister  of  Finance  may  issue,  on  the 
ground  that  the  money  is  not  justly  due,  or  that  it  is 
in  excess  of  the  authority  granted  by  Council,  or  for 
any  reason  other  than  that  there  is  no  parHamentary 
authority,  then  upon  a  report  of  the  case  prepared 
by  the  Auditor  General  and  the  Deputy  Minister  of 
Finance,  the  Treasury  Board  shall  be  the  judge  of 
the  sufficiency  of  the  Auditor  GeneraFs  objection  and 
may  sustain  him  or  order  the  issue  of  the  cheque  in 
its  discretion. 

151 


THE  CANADIAN  BUDGETARY  SYSTEM 

The  Auditor  General  shall,  in  all  cases  mentioned 
in  the  two  sections  last  preceding,  prepare  a  state- 
ment of  all  such  legal  opinions,  reports  of  council, 
special  warrants  and  cheques  issued  without  his  cer- 
tificate, and  of  all  expenditures  incurred  in  conse- 
quence thereof,  which  he  shall  deliver  to  the  Minister 
of  Finance,  who  shall  present  the  same  to  Parliament 
not  later  than  the  third  day  of  the  session  thereof 
then  next  ensuing. 

These  provisions  represent  a  practice  that  is  in  marked 
{  contrast  to  the  British  system.     Under  the  latter  sys- 
i  tem  the  Comptroller  and  Auditor  General,  the  officer 
V    '  corresponding  to  the  Auditor  General  of  Canada,  is  an 
officer  of  Parliament.     As  such  it  is  his  primary  duty  to 
see  that  the  commands  of  his  principal  are  rigidly  com- 
plied with.     He  is  the  one  authority  through  which,  in 
matters  financial,  the  Executive  is  prevented  from  ex- 
pending one  penny  which  has  not  been  authorized  by 
Parliament.     There  is  no  way  by  which  the  Executive 
can  control  or  overrule  his  decisions  in  respect  to  the 
authorizing  of  the  issue  of  money  from  the  treasury. 

In  the  Canadian  system  the  Auditor  General  has  more 
the  status  of  an  officer  of  the  executive  branch  of  govern- 
ment and,  as  indicated  by  the  sections  of  the  act  quoted, 
his  decisions  both  in  respect  to  the  issue  of  money  from 
[the  treasury  and,  as  will  later  appear,  in  respect  to  the 
allowance  of  particular  disbursements,  can  in  cases  be 
overruled  by  a  superior  executive  authority. 

It  should  be  noted,  however,  that  care  has  been  taken 
to  give  to  the  Auditor  General  independence  in  the  exer- 
cise of  his  duties  through  the  provision  giving  to  him  a 
status  similar  to  that  of  judges  in  that  he  can  be  removed 
from  office  only  on  an  address  of  the  two  Houses  of  Par- 
liament, and  that,  when  his  decision  is  based  upon  the 

152 


/ 


ISSUE  AND  DISBURSEMENT  OF  FUNDS 

contention  that  parliamentary  authority  for  the  issue  of 
the  money  does  not  exist,  his  decision  can  be  overruled  by 
the  Treasury  Board  only  upon  the  written  opinion  of  the 
Minister  of  Justice  that  there  is  parliamentary  authority 
for  the  issue  of  the  money.  In  all  cases,  also,  where  the 
action  of  the  Auditor  General  is  overruled  a  full  report 
must  be  made  to  Parliament  by  the  Minister  of  Finance. 

The  provision  authorizing  the  issue  and  expenditure 
of  money  that  has  not  been  appropriated  by  Parliament 
through  the  use  of  Governor  General's  warrants  is  like- 
wise a  wide  departure  from  both  British  and  American 
practice.  The  practical  operation  of  this  system  is  else- 
where fully  described  and  commented  upon. 

Turning  now  to  the  procedure  employed  in  securing 
the  issue  of  money  from  the  treasury,  the  Consolidated 
Revenue  and  Audit  Act  provides : 

When  any  sum  of  money  has  been  granted  to  His 
Majesty  by  Parliament  to  defray  expenses  for  any 
specified  public  service,  the  Governor-General  may, 
from  time  to  time,  under  his  sign  manual,  counter- 
signed by  a  member  of  the  Treasury  Board,  authorize 
and  require  the  Minister  of  Finance  to  issue  out  of 
the  moneys-in  his  hands,  appropriated  for  defraying 
the  expenses  of  such  service,  the  sums  required,  from 
time  to  time,  to  defray  such  expenses,  not  exceeding 
the  amount  of  the  sum  so  voted  or  granted. 

When  any  sum  of  money  has  been  granted  to  His 
Majesty  by  Parliament  to  defray  expenses  for  any 
specified  public  service,  and  as  soon  as  the  Governor- 
General  has  issued  his  warrant  authorizing  the  pay- 
ment of  such  sum  or  sums  as  are  required  to  defray 
such  expenses,  the  Minister  of  Finance  may,  from 
time  to  time,  on  the  application  of  the  Auditor  Gen- 
eral cause  credits  to  be  issued  in  favor  of  the  deputy 
heads,  officers,  clerks  or  other  persons  connected  with 

153 


^- 


THE  CANADIAN  BUDGETARY  SYSTEM 

the  several  departments  or  services  charged  with 
expenditure  of  the  moneys  so  authorized. 

Such  credits  shall  issue  on  the  several  banks  author- 
ized to  receive  public  moneys. 

Statements  in  duplicate  of  moneys  drawn  for  under 
such  credits,  together  with  the  cheques  paid  by  the 
banks  in  connection  therewith,  shall  be  rendered 
under  such  forms,  and  once  in  each  month  or  more 
often,  at  such  times  as  the  Treasury  Board  directs, 
one  duplicate  of  such  statement,  together  with  the 
cheques,  shall  be  rendered  to  the  Auditor-General, 
and  the  other  duplicate  to  the  Minister  of  Finance. 

The  Auditor  General,  being  satisfied  of  the  correct- 
ness of  the  statement,  may  request  the  Minister  of 
Finance  to  cause  cheques  to  be  prepared  to  reimburse 
the  banks  for  advances  under  such  credits  to  cover 
the  expenditures  made  or  authorized. 

Such  cheques  shall  be  signed  by  the  Minister  of 
Finance  and  countersigned  by  the  Auditor  General, 
or  signed  and  countersigned  by  their  respective  depu- 
ties or  officers  thereunto  duly  authorized. 

No  such  credit  shall  issue  in  favor  of  any  officer  or 
other  person  in  excess  of  any  appropriation  author- 
ized by  act  of  Parliament.' 

From  these  statutory  provisions  the  procedure  by 
which  public  moneys  are  paid  out  from  the  Consolidated 
Fund  is  made  fairly  plain.  It  will,  however,  be  advisable 
to  recapitulate  the  various  steps. 

As  in  England,  an  appropriation  or  supply  bill  having 
been  passed  by  the  Parliament  and  having  received  the 
assent  of  the  Governor  General,  the  effect  is  to  place  the 

1  Certain  payments  are  statutory  and  do  not  require  annual  appro- 
priations, such  as  interest  on  and  redemption  of  public  debt,  the 
Governor  General's  salary,  salaries  of  Lieutenant  Governors,  Ministers 
of  the  Crown,  the  Auditor  General,  judges'  salaries,  subsidies  to 
Provinces,  indemnities  to  Senators  and  Members,  superatinuation  and 
certain  pensions  and  other  payments  extending  over  a  terni  of  years 
and  authorized  by  Special  Acts  of  Parliament. 

154 


ISSUE  AND  DISBURSEMENT  OF  FUNDS 

sum  specified  at  the  disposal  of  the  Executive.     The  first 
step  then  for  its  expenditure  is  to  obtain  an  order  from  ; 
the  Executive,  that  is,  from  the  Governor  in  Council,  > 
authorizing  the  issuance  of  a  certain  amount  from  the 
treasury  and  placing  it  at  the  disposal  of  a  specified  pub- 
lic service.'     The  various  departments  make  application  i    / 
to  the  Minister  of  Finance  that  this  be  done.     Usually  ' 
about  a  month's  requirements  are  asked  for.     These  ap- 
plications are  passed  over  to  the  Auditor  General  who    , 
satisfies  himself  that  Parliament  has  made  the  necessary    1 
appropriations  and  then  issues  a  certificate  that  is  termed 
a  "Letter  of  Credit''  on  a  bank  which  has  government  1 
funds  on  deposit. 

The  letter  of  credit  is  then  issued  by  the  Finance  De-  i  ^ 
partment  and  bears  the  countersignature  of  the  Auditor   ^ 
General.     Its  effect  is  to  authorize  the  bank  to  pay  all 
checks    drawn   by   the   department   concerned.     These 
checks  are  payable  at  par  throughout  Canada  and  are    1(X 
charged  by  the  bank  to  its  Letter  of  Credit  Account. 

Disbursement  of  Public  Funds.     As  in  the  United 
States  government,  claims  against  the  government  may 
be  settled  and  paid  in  two  ways :  One,  on  the  direct  order     i/ 
of  the  Auditor  General  by  means  of  what  in  the  United 
States  is  known  as  a  settlement  warrant;  and,  two,  by       / 
payment  by  a  disbursing  officer  out  of  funds  which  have  V 
been  placed  at  his  disposal  through  a  letter  of  credit. 

There  are  two  methods  whereby  accounts  may  be 
paid.     One  is  what  I  may  call  the  letter  of  credit 
system  and  the  other  deals  with  the  payment  of  ac- 
counts in  a  somewhat  different  way.    Under  the  letter   \  ^/ 
of  credit  system,  where  an  appropriation  has  been    1 

^  Or  in  certain  cases  the  disbursement  may  be  made  directly  from 
the  treasury.  The  payments  thus  made  correspond  to  what  are  known 
in  the  United  States  as  "settlement  warrants." 

155 


THE  CANADIAN  BUDGETARY  SYSTEM 

made  to  a  given  department,  a  certain  part  of  that 
appropriation  is  placed  to  the  credit  of  the  depart- 
ment in  the  form  of  a  letter  of  credit  given  to  one  of 
the  banks.  In  that  case  parties  having  claims  against 
the  department  can  go  directly  to  the  department  and 
upon  their  claims  being  properly  certified  can  receive 
their  money  at  once.  Perhaps  by  way  of  illustration, 
we  might  take  the  case  that  was  brought  to  our  notice 
the  other  day  in  connection  with  the  indemnity  of 
members.  That  is  paid  by  the  letter  of  credit  system. 
...  A  member  will  go  to  the  clerk's  office  in  one  of 
the  neighboring  rooms,  and  upon  satisfying  the  clerk 
that  he  is  entitled  to  his  indemnity,  receives  a  check 
which  is  the  equivalent  of  money,  and  the  transaction 
is  closed.  That  method  runs  through  all  the  depart- 
ments to  which  letters  of  credit  are  issued.  The  other 
I  method  is  by  direct  audit  of  each  account.  If  I  were 
ito  apply  it  to  the  case  of  a  member  of  Parliament, 
instead  of  going  to  a  neighboring  room  and  getting 
the  amount  at  once  from  the  clerk,  he  would  satisfy 
the  clerk  that  the  amount  was  due.  Thereupon  a 
certificate  would  issue  and  an  application  be  made  to 
the  Auditor  General.  The  Auditor  General,  having 
in  due  course  certified  that  the  amount  was  due, 
would  make  application  to  the  Minister  of  Finance, 
who  in  due  course  would  authorize  the  payment,  and 
ultimately  the  party  concerned  would  get  his  money. 
By  the  letter  of  credit  system  he  gets  the  money 
immediately,  while  under  the  other  system,  he  is 
obliged  to  pass  through  the  direct  audit  system,  and 
that  involves  sometimes  necessarily,  and  sometimes 
unnecessarily,  we  think,  a  considerable  amount  of 
delay.^ 

As  soon  as  this  letter  of  credit  has  been  issued,  the  de- 
partment is  at  liberty,  as  has  been  said,  to  issue  against 
the  amount  named  therein  its  own  checks.     Statements 

i  Mr.  Fielding — Can.  Hansard,  1903,  pp.  11,  159. 

156 


ISSUE  AND  DISBURSEMENT  OF  FUNDS 

are  made  out  in  duplicate  of  all  the  moneys  paid  out 
under  each  individual  letter  of  credit.  One  of  these 
with  the  checks  actually  issued  goes  to  the  Auditor  Gen- 
eral and  the  other  is  sent  to  the  Minister  of  Finance.  If 
satisfied  as  to  the  correctness  of  the  statement  submitted 
and  with  the  proof  furnished  that  the  moneys  paid  have 
been  received  by  those  to  whom  it  was  really  due,  the 
Auditor  General  then  requests  the  Minister  of  Finance 
to  have  a  check  made  out  in  favor  of  the  bank  to  re- 
imburse it  for  the  advances  made  by  it  under  the  letter  of 
credit. 

A  statement  of  the  checks  drawn,  with  vouchers,  is 
rendered  monthly  to  the  Auditor  General  and  having 
been  found  correct  a  certificate  is  issued  to  the  Finance 
Department  to  issue  a  check  in  favor  of  the  bank  to 
cover  these  advances.  This  check  is  drawn  against  the 
Receiver  General's  account  and  countersigned  by  the 
Auditor  General  and  the  payments  charged  against  the 
several  appropriations  concerned. 

For  convenience  and  safety  there  are  some  expendi- 
tures audited  before  payment,  such  as  progress  estimates 
on  large  contracts  for  public  works,  subsidies  to  railways, 
subsidies  to  Provinces,  etc.,  and  in  these  cases  a  certifi- 
cate is  issued  by  the  Auditor  General  that  a  check  may 
issue  on  the  Receiver  General's  account.  This  check 
will  then  be  issued  by  the  Finance  Department. 

For  convenience,  where  paymasters  are  located  in  dis- 
tant parts  of  the  Dominion,  a  letter  of  credit  is  issued  in 
favor  of  the  paymaster  and  his  accountant  in  the  same 
manner  as  to  his  department.  For  instance  a  letter  of 
credit  is  issued  to  the  General  Manager  and  Accountant 
of  the  Intercolonial  Railway,  whose  headquarters  are  at 
Moncton,  in  New  Brunswick,  and  all  the  railway  em- 

157 


THE  CANADIAN  BUDGETARY  SYSTEM 

plovers  are  paid  by  check.  No  cash  is  placed  in  the 
hands  of  paymasters.  All  letter  of  credit  checks  must 
be  made  payable  to  order  and  these  checks  are  good 
evidence  of  payment.  Payments  in  foreign  countries 
are  made  by  bills  of  exchange  purchased  by  the  Finance 
Department. 

Payments  of  judges'  salaries  and  certain  public  func- 
tionaries, who  are  appointed  for  life  or  good  behavior, 
superannuation  allowances  and  pensions,  where  the 
amounts  are  fixed  charges,  are  paid  in  a  different  man- 
ner, viz.,  the  payee  names  the  bank  and  place  at  which  he 
desires  to  draw  his  pay.  On  the  certificates  of  the  Audi- 
tor General  the  Finance  Department  issues  an  order  to 
the  bank  to  pay  so  and  so  on  deposit  of  his  receipt,  with 
certain  evidence  that  he  is  living,  so  much  per  month 
until  otherwise  instructed.  The  banks  send  these  re- 
ceipts to  their  branch  at  Ottawa  who  are  in  turn  re- 
imbursed by  a  check  of  the  Finance  Department,  usually 
monthly.  Any  bank  where  the  man  is  satisfactorily 
identified  will  cash  these  receipts  at  par.  This  system 
saves  the  issue  of  thousands  of  checks  and  has  been 
found  perfectly  safe. 

It  will  be  remarked  that  the  Canadian  system  does  not 
provide  for  a  Paymaster  General,  as  does  the  British 
system,  but  conforms  to  the  American  system  under 
which  all  claims,  except  those  paid  on  the  direct  order 
of  the  Auditor  General,  are  paid  by  disbursing  officers 
attached  to  the  several  services  of  the  government. 


158 


CHAPTER  X 


I. 


AUDIT  OF  PUBLIC  ACCOUNTS 


Audit  of  Disbursements.  The  Consolidated  Reve- 
nue and  Audit  Act  provides  in  detail  for  the  manner  in 
which  all  disbursements  shall  be  audited.  In  view  of  the 
fact  that  this  act  is  reproduced  in  full  as  an  Appendix  it 
will  not  be  necessary  to  do  more  than  point  out  certain 
of  its  important  features. 

The  first  of  these  is  that  provision  is  made  that  the  ac- 
counts shall  be  audited  in  the  first  place  by  the  accounting 
officers  of  the  departments  having  the  expenditure  of  the 
funds  granted.     Section  55  of  the  act  thus  reads: 

The  deputy  heads  of  the  several  departments  or 
its  officers,  clerks  or  other  persons  charged  with. the 
expenditure  of  public  moneys,  shall  respectively  audit 
the  details  of  the  accounts  of  the  several  services  in 
the  first  instance,  and  be  responsible  for  the  correct- 
ness of  such  audit. 

The  accounts  as  so  audited  are  then  transmitted  to 
the  Auditor  General  by  whom,  as  it  is  expressed  in  the 
act,  they  shall  be  examined  "on  behalf  of  the  House  of 
Commons."  It  would  appear  that  this  examination 
need  not  amount  to  a  detailed  reaudit  of  the  accounts 
except  in  so  far  as  either  the  Auditor  General  himself  or 
the  Minister  of  Finance  deems  it  desirable  that  such  a 
detailed  reaudit  shall  be  made.  It  is  thus  provided  in 
Section  59  of  the  act  that : 

If  the  Auditor  General  is  satisfied  that  the  accounts 
bear  evidence  that  the  vouchers  have  been  completely 
checked,  examined  and  certified  as  correct  in  every 
respect,  and  that  they  have  been  allowed,  and  passed 
by  the  proper  departmental  officers,  he  may  admit  the 

159 


THE  CANADIAN  BUDGETARY  SYSTEM 

same  as  satisfactory  evidence  of  payment  in  support 
of  the  charges  to  which  they  relate :  Provided  that,  if 
the  Minister  of  Finance  desires  any  such  vouchers  to 
be  examined  by  the  Auditor  General  in  greater  detail, 
the  Auditor  General  shall  cause  such  vouchers  to  be 
subjected  to  such  further  examination  in  detail  as  the 
Minister  of  Finance  thinks  fit  to  prescribe. 

This  examination  of  the  accounts  by  the  Auditor  Gen- 
eral is  not  postponed  until  the  end  of  the  year  but  pro- 
ceeds currently,  the  act  providing  that : 

The  Auditor  General  shall,  in  order  that  such  ex- 
amination may,  as  far  as  possible,  proceed  pari  passu 
with  the  cash  transactions  of  the  several  accounting- 
departments,  have  free  access,  at  all  convenient  times, 
to  the  books  of  account  and  other  documents  relating 
to  the  accounts  of  such  departments,  and  may  require 
the. several  departments  concerned  to  furnish  him, 
from  time  to  time,  or  at  regular  periods,  with  accounts 
of  the  cash  transactions  of  such  departments  respect- 
ively up  to  such  times  or  periods. 

In  addition  to  other  provisions  that  must  be  met  the 
act  contains  the  following  important  requirement : 

No  payment  shall  be  authorized  by  the  Auditor 
General  in  respect  of  work  performed,  or  material 
supplied  by  any  person  in  connection  with  any  part 
of  the  public  service  of  Canada,  unless  in  addition  to 
any  other  voucher  or  certificate  which  is  required  in 
that  behalf,  the  officer,  under  whose  special  charge 
such  part  of  the  public  service  is,  certifies  that  such 
work  has  been  performed,  or  such  material  supplied, 
as  the  case  may  be,  and  that  the  price  charged  is 
according  to  contract,  or  if  not  covered  by  contract, 
is  fair  and  just. 

The  Treasury  Board  as  an  Organ  of  Appeal.     One 

of  the  most  important  features  of  the  Canadian  auditing 

i6o 


AUDIT  OF  PUBLIC  ACCOUNTS 

system  is  the  fact  that  the  Auditor  General's  rulings  are 
not  in  all  cases  final.  We  have  already  seen  that  where 
the  Auditor  General  has  refused  to  issue  his  warrant  for 
the  issue  of  money  from  the  treasury  on  the  ground  that 
parliamentary  authority  therefor  is  lacking,  or  for  other 
reasons,  that  an  appeal  may  be  taken  from  his  decision 
to  the  Treasury  Board,  and  that  the  latter  may  order  the 
money  to  issue  notwithstanding  the  refusal  of  the 
Auditor  General  to  act. 

A  similar  right  exists  to  appeal  from  the  decision  of 
the  Auditor  General  to  the  Treasury  Board  when  the 
former  refuses  to  allow  an  item  in  making  his  audit  of 
disbursements.     The  act  thus  provides  that : 

If,  during  the  progress  of  the  examination  by  the 
Auditor  General  hereinbefore  directed,  any  objection 
arises  to  any  item  to  be  introduced  into  the  appropri- 
ation account  of  any  grant,  such  objection  shall, 
notwithstanding  such  account  has  not  been  rendered 
to  him,  be  immediately  communicated  to  the  depart- 
ment concerned ;  and  if  the  objection  is  not  answered 
to  his  satisfaction  by  such  department,  it  shall  be 
referred  by  him  to  the  Treasury  Board,  and  the 
Treasury  Board  shall  determine  in  what  manner  the 
items  in  question  shall  be  entered  in  the  annual  appro- 
priation account.' 

^  For  an  account  of  a  number  of  the^overrulings  of  the  Auditor 
General  by  the  Treasury  Board,  together  with  all  correspondence 
relating  thereto,  see  the  Auditor  General's  Annual 'Report  for  1902- 
1903.  The  following  may  be  given  as  a  typical  minute  of  the  Treasury 
Board  ordering  the  issuance  of  a  check  notwithstanding  the  objection 
of  the  Auditor  General. 

"Treasury  Board  Minute,  February  16,  1904. — The  board  had  under 
consideration  the  correspondence  in  connection  with  the  appeal  by  the 
Post  Office  Department  from  objections  raised  by  the  Auditor  General 
regarding  the  appointment  and  payment  of  certain  third-class  clerks 
in  that  department. 

"The  objections  of  the  Auditor  General  having  been  taken  under 
subsections  (a)  and  (c)  of  section  32  of  the  Consolidated  Revenue  and 
Audit  Act,  the  board  had  under  consideration  a  report  from  the 
Deputy  Minister  of  Finance  under  date  February  10,  1904,  presented 
in  accordance  with  subsection   (c)  of  said  section  32,  and  the  docu- 

161 


THE  CANADIAN  BUDGETARY  SYSTEM 

In  fact  the  number  of  overrullings  of  the  Auditor  Gen- 
eral is  not  very  great,  and  though  no  serious  misuse  of 
its  authority  by  the  Treasury  Board  is  charged,  the  prac- 
tice has  not  escaped  the  criticism  that  the  board  is  apt  to 
decide  against  the  Auditor  General  in  favor  of  the  de- 
partment head.     Thus  we  find  one  critic  saying: 

There  can  be  no  impartial  tribunal  where  men  are 
the  judges  of  their  own  case,  and  that  is  the  condition 
we  have,  so  far  as  the  Treasury  Board  is  concerned. 
In  many  cases  one  of  the  members  of  that  board  is  a 
minister  who  is  in  direct  conflict  with  the  Auditor 
General  for  the  time  being,  and  it  is  only  natural  that 
they  should  consider  the  matter  more  or  less  biased 
in  favor  of  the  department,  and  prejudiced  to  some 
extent  against  the  Auditor  General.' 

In  reply  to  this  criticism,  one  of  Canada's  foremost 
statesmen  has  said: 

The  only  argument  which  my  honorable  friend 
(Mr.  Lennox)  has  brought  against  the  present  Audit 
Act  is  that  in  the  case  of  differences  of  opinion  be- 
tween the  Auditor  General  and  the  Government, 
these  differences  are  referred  to  the  Treasury  Board, 
which  simply  means  making  the  Government  the 
judges  in  their  own  case.  I  do  not  dispute  that  the 
Government  are  a  committee  of  Parliament  charged 
with  the  executive  government  of  the  country;  it  is 
their  duty  to  carry  out  the  will  of  Parliament,  and  in 
doing  so  differences   of  opinion   arise  between   the 

ments  referred  to  in  such  report.  The  board  had  also  under  consider- 
ation a  letter  from  the  Deputy  Minister  of  Justice,  dated  February  12, 
1904,  in  which  he  states  that  he  is  of  opinion  that  sections  20  and  28 
of  the  Act  of  last  session  (chapter  9),  in  amendment  to  the  Civil 
Service  Act,  afford  parliamentary  authority  for  the  appointment  and 
the  payment  of  the  salaries  of  the  third-class  clerks  in  question,  in 
which  view  he  states  that  the  Attorney  General  of  Canada  concurs. 

"The  board  are  of  opinion  that  the  objections  of  the  Auditor 
General  are  not  well  taken  and  should  be  overruled,  and  they  direct 
that  payment  be  made  of  the  salaries  of  the  third-class  clerks  in 
question.  "J.  M.  Courtney,  Secretary." 

1  Mr.  Lennox — Can.  Hansard,  1905,  p.  9624. 

162 


AUDIT  OF  PUBLIC  ACCOUNTS 

Government  and  the  Auditor  General  which  when 
referred  to  the  Treasury  Board  practically  come 
before  the  Government  again.  My  honorable  friend 
says  that  the  Government  are  asked  through  the 
Treasury  Board  to  revise  their  own  acts.  But,  to 
put  it  more  correctly,  it  is  a  reference  to  the  Govern-  , 
ment  to  judge  between  the  Auditor  General  and  the 
minister  who  asked  for  the  appropriation.  *  =5^  *  1 
A  reference  is  made  to  the  Treasui:y  Board  which  is 
in  effect  the  Government.  But  there  is  something 
above  the  Government,  and  that  something  is  Parlia- 
ment. Parliament  can  revise  the  decision  of  the  "- 
Government,  and  it  is  the  duty  of  the  Auditor  General 
to  refer  to  Parliament  immediately  upon  its  assem- 
bling the  differences  of  opinion  which  have  arisen 
between  himself  and  the  Government.  Parliament 
then  has  the  duty  of  pronouncing  upon  the  action  ^ 
of  the  Government  and  of  the  Auditor  General." 

Of  the  plan  to  substitute  a  court  of  law  for  the  Treas- 
ury Board,  the  same  speaker  had  this  to  say: 

The  change  which  the  Auditor  General  wanted  was 
that  some  judicial  authority  should  be  substituted  for 
the  Treasury  Board.  If  that  amendment  had  been 
adopted,  the  result  would  have  been  that  a  judicial 
authority  would  have  the  power  to  say  whether  or 
not  certain  expenditures  ordered  by  Parliament 
should  be  carried  out  and  if  carried  out  in  what  way 
it  should  be  carried  out.  To  this  we  could  not  assent. 
We  must  abide  by  the  existing  system  which  simply  \ 
is  that  Parliament  votes  the  money  and  places  it  in  \ 
the  hands  of  the  Government  to  be  expended.^ 

As  a  final  observation  regarding  the  duty  of  the  Audi- 
tor General  to  prevent  the  making  of  improper  pay- 
ments, it  is  to  be  observed  that  this  authority  does  not 
extend  beyond  the  raising  of  legal  or  technical  objections. 

1  Sir  Wilfried  Laurier — Can.  Hansard,  1905,  p.  9627. 

2  Sir  Wilfrid  Laurier — Can.  Hansard,  1905,  p.  9629. 

163 


/ 


/( 


THE  CANADIAN  BUDGETARY  SYSTEM 

His  duties  are  of  an  inquisitorial  and  not  of  an  adminis- 
trative nature.  He  is  merely  an  officer  of  verification  to 
see  that  the  government  appropriations  are  spent  accord- 
ing to  the  directions  of  Parliament.  It  is  not  his  func- 
tion to  modify  contracts  or  to  prevent  wasteful  expendi- 
tures. As  pointed  out  by  Mr.  Gladstone,  his  duties  are 
wholly  of  a  legal  and  not  of  a  political  character.  The 
coercive  and  political  side,  which  appertains  to  public 
expenditure,  is  wholly  under  the  control  of  the  House  of 
Commons  and  of  the  Public  Accounts  Committee. 

Public  Accounts  Committee.  We  have  taken  pains 
to  point  out  that  the  function  of  Parliament,  or  of  any 
fund  raising  and  granting  authority,  does  not  cease  with 
the  appropriation  of  money  for  the  conduct  of  the  gov- 
ernment. Follow^ing  the  grant  it  is  its  duty  to  assure 
itself  that  its  orders  in  respect  to  the  expenditure  of  pub- 
lic funds  are  in  fact  faithfully  carried  out.  The  require- 
ment of  an  audit  of  disbursements  and  a  report  of  the 
results  of  such  audit  constitute  but  the  means  through 
which  it  can  perform  this  function.  There  still  remains 
j  the  necessity  that  Parliament  shall  make  provision  for 
I  the  examination  by  itself  of  this  report  and  the  taking 
V  f  of  such  action  as  may  be  required  to  correct  any  abuses 
discovered. 

When  the  Dominion  House  of  Commons  met  for  the 
first  time  after  the  establishment  of  confederation,  it 
appointed  among  its  other  select  standing  committees 
one  to  review  the  public  accounts.  In  taking  this  step 
it  was  merely  imitating  an  English  precedent.  But  the 
Canadian  House  did  not  follow  the  example  of  Great 
Britain's  lower  chamber  in  regard  to  the  composition  of 
this    important   committee.     The   English   Public   Ac- 

164 


AUDIT  OF  PUBLIC  ACCOUNTS 

counts  Committee  consists  of  only  fifteen  members, 
the  majority  of  which,  as  well  as  the  chairman,  are 
chosen  from  the  ranks  of  the  Opposition.  This  has  been 
done  on  the  theory  that,  as  the  Opposition  have  the  right 
to  investigate  government  expenditures,  it  is  only  proper 
that  both  the  initiation  and  the  control  of  any  proposed 
inquiry  into  the  management  of  the  public  finances 
should  be  in  the  hands  of  those  opposed  to  the  admin- 
istration. Members  of  wide  financial  experience  are 
appointed  to  this  committee  and  its  chairman  is  generally 
an  ex-secretary  of  the  English  Treasury. 

In  Canada,  on  the  other  hand,  the  Dominion  Public 
Accounts  Committee  has  had  at  times  over  eighty  mem- 
bers. The  majority  of  these  are  always  supporters  of 
the  Government  including  the  chairman,  who  is  never  a 
member  of  the  Cabinet.  This  custom  which  prevails  of 
appointing  ministers  of  the  Crown  to  this  committee,  has, 
however,  been  the  subject  of  adverse  comment. 

I  believe  it  is  a  mistake,  I  believe  it  is  contrary  to 
the  spirit  of  the  public  accounts  committee  and  the 
object  for  which  it  is  formed,  that  a  large  number  of 
ministers  should  have  seats  there.  I  admit  the  wis- 
dom and  propriety  of  allowing  the  ministers  to  be 
heard  before  the  Public  Accounts  Committee  when  the 
expenditures  of  their  several  departments  are  under 
consideration  by  the  committee.  That  can  be  done, 
I  think,  and  done  in  accordance  with  our  rules,  but 
I  do  say  that  it  cannot  but  strike  the  public  at  large 
as  a  very  unfair  and  a  very  improper  thing  that  we 
should  bring  up  questions  for  investigation  into  the 
spending  departments,  and  that,  again  and  again, 
investigation  should  be  refused  by  a  majority  com- 
posed, as  I  have  said,  of  the  chiefs  of  these  very 
spending  departments.' 

^  Sir  Richard  Cartwright — Can.  Hansard,  1894,  P-  1878. 

165 


^ 


THE  CANADIAN  BUDGETARY  SYSTEM 

That  the  large  membership  of  the  Dominion  Public 
J       Accounts  Committee  is  a  drag  on  its  efficiency  has  been 
frequently  conceded. 

It  is  a  working  committee  and  its  members  are  too 
large.  We  have  not  had  the  same  members  in  attend- 
ance de  die  in  diem;  and  there  was  no  certainty  that 
members  present  one  day  would  be  present  at  the 
next  sitting,  and  that  members  would  keep  up  a 
continuous  attention  to  the  business  before  the  com- 
mittee.^ 

In  1883,  the  experiment  was  tried  of  reducing  the  size 
of  the  committee.  But  it  was  quickly  restored  to  its 
original  strength,  apparently  in  order  to  insure  the  at- 
tendance of  a  quorum  on  all  occasions. 

Originally,  the  committee  was  concerned  with  the 
audit  of  the  public  accounts.     It  was  relieved  of  this 
duty,  however,  in  1878,  when  the  Auditor  GeneraFs  of- 
fice was  established. 
\  As  a  committee  of  inquiry  the  committee  possesses 

very  considerable  powers. 

Everything  between  the  lids  of  the  Auditor  Gen- 
eral's report  is  referred  to  the  committee.  It  is  the 
right  of  members  there  to  move  that  accounts,  letters, 
\  papers,  correspondence  and  vouchers  be  laid  before 
the  committee — not  copies,  but  the  documents  them- 
selves, and  we  have  a  right  to  examine  these  to  our 
hearts'  content.  And,  if  we  are  not  satisfied,  we  have 
the  right  to  ask  the  committee  to  subpoena  those  who 
can  give  us  information  concerning  the  matters  in 
question.  These  may  be  private  citizens;  they  may 
be  officials  in  the  departments;  they  may  be  contrac- 
tors or  even  ministers  of  the  Crown ;  and  when  these 
parties  come  before  us  we  have  the  right  to  question 
and  cross-question  them  like  witnesses  before  a  court, 

^  Sir  John  A.  Macdonald — Can.  Hansard,   1883,  p.  37. 

166 


AUDIT  OF  PUBLIC  ACCOUNTS 

and  to  have  the  original  documents  in  our  hands  to 
guide  us  in  that  examination.  So  we  have  the  right 
to  make  inquiry  along  these  lines:  first,  by  moving 
for  documents;  second,  by  examining  original  docu- 
ments in  the  departments  of  the  Government;  third, 
by  asking  to  have  documents  submitted  to  the  com- 
mittee on  public  accounts;  and,  fourth,  by  asking  to 
have  parties  brought  before  that  committee  for 
examination.' 

Witnesses  are  summoned  at  public  expense  before  the 
committee  if  a  member  will  vouch  as  to  the  materiality 
of  the  evidence  they  are  to  give. 

The  rule  laid  down  in  the  public  accounts  commit- 
tee and  the  privileges  and  elections  committee  and 
every  committee  on  which  I  have  had  the  honor  of 
sitting  was  that  if  any  gentleman  of  that  committee 
or  any  member  of  this  House  would  stake  his  reputa- 
tion on  the  belief  that  a  witness  was  material,  that 
witness  was  called,  as  a  matter  of  course.  And  natu- 
rally so.  Because  any  gentleman,  any  member  of  that 
committee  who  took  it  upon  himself  without  suffi- 
cient cause  to  ask  that  a  witness  be  summoned,  after 
stating  that  a  witness  was  material,  took  his  reputa- 
tion in  his  hands. ^ 

Despite  its  extensive  powers,  the  fact  that  the  Cana- 
dian Public  Accounts  Committee  is  controlled  by  the 
party  in  power,  and  has  as  its  chairman  a  member  of  the 
Cabinet  whose  acts  are  to  be  inquired  into,  has  prevented 
it  from  exercising  its  functions  effectively.  An  ex- 
amination of  its  reports  and  unpublished  stenographic 
transcripts  of  its  meetings  will  sufficiently  show  that  it 
fails  to  make  a  full  and  satisfactory  investigation  of  pub- 
lic expenditures.     The  inadequate  results  achieved  are 

1  Mr.  Sproule— Can  Hansard,  1907-08,  p.  1783. 

2  Mr.  Borden— Can.  Hansard,  1902,  p.  141 1. 

167 


/ 


V/ 


THE  CANADIAN  BUDGETARY  SYSTEM 

seen  to  be  due  in  part  to  the  interjection  of  party  politics 
into  the  work  of  the  committee,  and  in  part  to  the  self- 
interest  of  the  majority  element.  Instead  of  both  sides 
uniting  in  an  effort  to  investigate  thoroughly  the  public 
accounts  so  as  to  disclose  all  improper  expenditures,  if 
any,  as  should  be  the  case,  the  chief  aim  of  the  Opposi- 
tion is  to  uncover  such  disbursements  as  will  tend  to  dis- 
credit the  administration,  and  the  object  of  the  chairman 
and  majority  members  is  to  prevent  such  disclosures. 
And,  in  order  to  avoid  embarrassing  revelations,  the  sup- 
porters of  the  Government  limit  as  far  as  possible  all  in- 
quiries started  by  their  opponents. 

The  following  extracts  from  the  Canadian  Hansard 
will  serve  to  illustrate  the  criticism  which  members  of 
the  House  have  brought  against  the  manner  in  which 
the  Committee  of  Public  Accounts  performs  its  work. 

In  Canada,  during  the  present  session,  at  the  first 
meeting  of  the  public  accounts  committee,  six  mem- 
bers moved  for  41  sets  of  papers.  There  is  no  doubt 
whatever  that  all  these  papers  moved  for  are  de- 
manded for  party  purposes  and  in  the  expectation 
that  campaign  literature  may  be  derived  therefrom. 
Of  course,  it  is  needless  to  say  that  the  six  members 
are  all  opposition  members." 

The  public  accounts  committee  is  appointed,  in 
theory,  to  revise  the  public  accounts,  to  suggest  im- 
provements, to  correct  errors.  But  anyone  w^ho  has 
attended  the  meetings  of  the  public  accounts  com- 
mittee knows  that  this  is  how  its  machinery  works: 
Those  who  are  opposed  to  the  Government  go  into 
an  examination  of  an  account;  they  are  never  assisted 
by  the  supporters  of  the  Government;  but  in  ninety- 
nine  cases  out  of  a  hundred  they  are  opposed  by  the 

1  Report  of  Commission  on  the  Civil  Service,  Canadian  Sessional 
Papers,  Volume  XLII,  No.  15,  p.  23. 

168 


AUDIT  OF  PUBLIC  ACCOUNTS 

supporters  of  the  Government,  either  by  every  cir- 
cumstance that  can  mitigate  unfavorable  criticism 
being  suggested  or  by  obstacles  being  actually 
thrown  in  the  way  to  prevent  a  successful  issue  of 
the  contention  of  the  opposition/ 

The  whole  work  of  the  committee  (public  accounts) 
seems  to  be  this:  One  side,  the  opposition,  wants  to 
investigate,  and  the  other  side  wants  to  obstruct.^ 

Let  a  member  of  Parliament  endeavor  to  ascertain 
what  has  been  done  with  the  people's  money,  and  the 
very  gentlemen  who  should  assist  us  in  doing  so  take 
no  interest  or  part  in  it,  except  to  block  any  investi- 
gation that  may  be  attempted  by  gentlemen  on  this 
side  of  the  House.^ 

It  is  well  know^n  that  for  years  the  principle  has 
been  applied,  and  is  daily  being  applied  more  fre- 
quently, that  the  Government  majority  can  control 
what  investigations  shall  be  held,  what  evidence  shall 
be  taken,  what  questions  shall  be  asked,  and  what 
answers  given,  even  by  witnesses  brought  down  by 
the  opposition.* 

I  do  not  think  the  opposition  members  want  any 
obstruction  in  the  committee ;  they  are  at  work  from 
the  very  start  of  any  inquiry  to  the  end,  but  from  the 
other  side  there  is  a  fire  of  objections.  *  *  *  if  the 
honorable  member  for  East  Grey  (Mr.  Sproule)  asks 
a  question  and  does  not  put  it  in  proper  legal  form 
and  with  the  precision  laid  down  in  the  law  books, 
some  young  gentleman  of  the  legal  profession  jumps 
up  and  tells  him  he  is  out  of  order.  *  *  *  "pj^g 
chairman  agrees  because  as  he  tells  us  he  has  to  carry 
on  the  proceedings  as  nearly  as  possible  like  those  of 
a  court  of  law.' 

1  Mr.  Fraser — Can.  Hansard,  1902,  p.  1894. 

2  Mr.  Barker— Can.  Hansard,  1906-07,  p.  5853- 

•^  Mr.  Northrup — Can.  Hansard,  1906-07,  p.  5837. 
*  Mr.  Northrup — Can.  Hansard,  1906-07,  p.  5836. 
5  Mr.  Barker— Can.  Hansard,  1906-07,  p.  5852. 

169 


^ 


THE  CANADIAN  BUDGETARY  SYSTEM 

The  usual  custom  in  the  public  accounts  committee 
is  for  ministers  of  the  Crown  to  attend  that  commit- 
tee, and  whenever  a  witness  is  called  to  give  evidence 
which  they  fear,  they  are  the  first  to  say  to  the 
witness:  It  is  not  necessary  for  you  to  answer  that 
question." 

When  w^e  go  to  the  public  accounts  committee  and 
summon  parties  before  us,  and  have  them  sworn  to 
tell  the  truth  and  when  we  put  a  question,  some 
member  of  the  Government  says:  Don't  answer  that 
question.  Then  we  appeal  to  the  chairman  of  the 
committee  to  know  if  the  witness  is  not  obliged  to 
answer  the  question,  and  he  says:  No,  he  need  not 
answer  it  if  he  does  not  wish.  Then  we  appeal  to 
the  committee  over  the  head  of  the  chairman,  and  by 
a  partisan  majority  the  committee  votes  almost  every 
time  to  sustain  the  ruling  of  the  chair. ^ 

It  is  laid  down  unmistakably  that  the  public 
accounts  committee  has  the  right  to  summon  any 
witness  required  to  give  information  with  regard  to 
any  item  under  consideration.  Then  when  we  brought 
witnesses  before  the  committee  and  asked  questions 
designed  to  bring  out  information  which  we  deemed 
it  to  be  in  the  public  interest  to  make  known,  they 
told  the  witnesses  that  they  need  not  answer  the 
question.  Is  this  the  duty  of  a  member  of  the  com- 
mittee? He  abandons  his  place  and  becomes  a  coun- 
sel for  the  witness  rather  than  a  member  of  the 
committee.^ 

They  (witnesses)  appear  before  the  committee;  the 
important  question  is  asked  and  there  is  an  absolute 
refusal  to  answer.  The  chairman  is  again  appealed 
to.  He  sustains  the  witness  in  his  refusal.  The  com- 
mittee is  again  appealed  to,  to  do  what?  Order  the 
witness  to  answer?     No,  but  simply  to  report  the 

1  Mr.  Ingram— Can.  Hansard,  1904,  p.  1945.  *    , 

2  Mr.  Sproule — Can.  Hansard,  1907-08,  p.  1785. 
^  Mr.  Sproule — Can.  Hansard,  1902,  p.  3260. 

170 


AUDIT  OF  PUBLIC  ACCOUNTS 

matter  to  this  House  that  we  may  find  out  on  the 
floor  of  Parliament  whether  the  question  is  germane 
and  ought  to  be  answered.  That  obedient  chairman 
and  that  obedient  majority  of  the  committee  refused 
to  allow  the  evidence  to  be  reported  to  this  House/ 
Time  and  time  again,  when  questions  have  been 
asked  in  that  committee  (on  Public  Accounts)  with 
regard  to  public  expenditure,  the  chairman,  without 
waiting  for  objection  to  be  raised,  tells  the  witness 
that  he  has  no  right  to  answer  the  question.  It  is 
tor  the  committee  to  decide  whether  the  question 
should  be  answered  or  not.  But  the  chairman  does 
not  wait  for  any  objection  from  members  of  the  com- 
mittee. He  even  goes  so  far  as  to  say,  before  a 
witness  is  brought  in,  he  will  not  allow  him  to 
answer.  Is  that  partisanship  or  is  it  not?  I  say  that 
the  arm  of  parliament  is  paralyzed  in  that  committee, 
and  the  representatives  of  the  people  cannot  do  their 
duty;  they  cannot  get  the  information  they  ought  to 
have  to  lay  before  this  House  that  the  public  may  be 
able  to  judge  whether  there  has  been  a  proper  expen- 
diture of  public  money  or  not." 

When  in  a  majority  either  political  party  is  equally     \  y^ 
ready  to  obstruct  the  inquiry.  ^ 

If  there  was  one  line  of  demarcation,  which  in 
former  days  was  more  distinct  than  another  between 
the  two  parties,  it  was  the  fidelity  with  which  the 
Reform  (Liberal)  party  claimed  to  represent  the 
people  and  sought  to  wrest  from  the  Crown  the  con- 
trol of  the  people's  money  because  the  people  con- 
tribute it.  Where  is  the  Reform  party  today?  The 
people  still  contribute  the  money,  but  the  Reform 
party  today,  is  the  party  which  declines  to  allow  the 
representatives  of  the  people  to  investigate  and  ascer- 

1  Mr.  Foster — Can.  Hansard,  1906,  p.  3633. 

2  Mr.  Sproule— Can.  Hansard,  1906-07,  p.  5794- 

171 


THE  CANADIAN  BUDGETARY  SYSTEM 

tain    how    that    money    has    been    spent    and    who 
received  it/ 

When  the  report  of  the  (Public  Accounts)  com- 
mittee, based  on  insufficient  evidence,  was  brought 
before  this  House,  this  House  sokmnly  voted  that  it 
was  absolutely  correct.  A  report  which  stated  that 
all  the  evidence  offered  had  been  taken,  when  every 
man  in  the  House  knew  that  the  committee  had 
steadily  refused  to  admit  the  evidence,  was  accepted 
by  this  House  as  a  complete  and  impartial  report. 
*  '''  *  Is  it  any  wonder,  when  such  a  policy  is 
followed,  that  our  expenditures  should  have  increased 
from  $40,000,000  to  over  $100,000,000?  Is  it  any 
wonder  that  we  should  find  ministers  recreant  to  their 
duty  and  allowing  contractors,  middlemen  and  others 
to  mulct  this  country  in  most  extravagant  sums  and 
deputy  heads  vouching  for  these  expenditures,  when 
we  find  committee  after  committee  of  investigation 
persistently  refusing  to  have  any  light  thrown  upon 
their  transactions,  and  this  House  endorsing  them  in 
their  efforts  to  block  legitimate  inquiry?" 

This  plain  subversion  of  the  original  intent  and  pur- 
pose of  a  public  accounts  committee  explains  the  com- 
parative infrequency  with  which  the  committee  meets. 
Sessions  of  the  committee  are  held  only  when  some  mem- 
V  I  ber  desires  to  bring  some  particular  matter  to  its  atten- 
tion. 

The  practice  has  been  that  the  public  accounts 
committee  is  not  called  together  until  some  member 
brings  a  matter  before  the  committee.^ 

If  this  session  lasts  to  the  first  of  July,  we  will  have 
fourteen  to  say  twenty  meetings  of  the  public  ac- 
counts committee.  That,  at  the  rate  of  two  hours 
per  day,  means  forty  hours,  but  half  of  the  time  is 

1  Mr.  Northrup — Can.  Hansard,  1906-07,  p.  5836.        *    , 

2  Mr.  Northrup — Can.  Hansard,  1907-08,  p.  5839. 
^  Mr.  Middleboro — Can.  Hansard,  1916,  p.  842. 

172 


AUDIT  OF  PUBLIC  ACCOUNTS 

taken  up  at  each  meeting  by  members  on  the  liberal 
side  who  talk  so  much  that  it  is  impossible  to  get 
down  to  the  facts  that  the  committee  is  endeavoring 
to  investigate.  That  will  leave  twenty  hours  to 
investigate  the  whole  of  the  departments  of  the 
Government." 

This  (public  accounts)  committee  is  one  which  it 
is  not  convenient  to  call  together  very  often.  We 
have  now  been  five  weeks  in  session,  and  we  have 
not  yet  examined  a  single  witness.  '^  *  *  As  a  rule 
the  committee  is  hardly  called  together  more  than 
once  a  week;  it  is  with  very  great  difficulty  indeed 
that  we  have  ever  succeeded  in  getting  it  called 
together  twice  a  week.  We  do  not  know  how  many 
weeks  it  may  be  our  fate  to  spend  here,  but  at  the 
average  rate  of  proceeding  we  would  not  be  able  to 
have  more  than  seventeen  or  eighteen  meetings,  and 
it  is  very  doubtful  if  we  would  succeed  in  getting  this 
number.^ 

As  a  considerable  part  of  its  sessions  is  usually  taken 
up  with  unprofitable  wrangling  and  full  investigation  is 
more  or  less  obstructed,  the  Dominion  Public  Accounts 
Committee  ^rarely  if  ever  reports  positive  conclusions 
concerning  any  matter.  It  contents  itself  with  simply 
reporting  the  testimony  taken  before  it  to  the  House  of 
Commons  without  any  recommendations. 

Notwithstanding  its  defects,  however,  it  is  generally 
admitted,  even  by  its  critics,  that  the  Committee  on  Pub- 
lic Accounts  is  of  great  value.  The  mere  fact  that  any  \ 
item  of  expenditure  may  thus  be  brought  up  for  hostile 
examination  and  criticism,  and  the  evidence  regarding 
it  made  public,  cannot  but  have  a  very  considerable  value 
in   restraining  the   Government  or  particular  officials 

1  Mr.  J.  D.  Reid— Can.  Hansard,  1905,  p.  3663. 

2  Sir  Richard  Cartwright— Can.  Hansard,  1894,  p.  1706. 


y 


THE  CANADIAN  BUDGETARY  SYSTEM 

from  authorizing  or  permitting  improper  expenditures. 
These  investigations  of  the  committee  might  be  made 
more  thorough  and  less  tinged  with  poHtical  partisan- 
ship, but,  such  as  they  are,  they  constitute  a  valuable  and 
'.  indispensable  link  in  the  parliamentary  control  of  the 
'  public  purse.  In  this  connection  it  will  be  pertinent  to 
quote  the  words  of  Durell  in  his  recent  work  on  Parlia- 
mentary Grants,  with  reference  to  the  influence  of  the 
Public  Accounts  Committee  of  the  British  House  of 
Commons.^     He  says : 

The  admitted  influence  of  the  Committee  and  the 
important  position  it  has  obtained  form  therefore  a 
striking  commentary  on  the  way  in  which  it  has  per- 
formed its  work  during  the  past  half  century,  achiev- 
ing its  results  in  spite  of  the  absence  of  direct  powers 
of  enforcing  its  reports  or  recommendations.  It  has 
no  power,  even  after  the  most  minute  examination 
and  on  the  clearest  evidence,  to  disallow  any  item. 
It  can  only  call  attention  to  it,  and  express  its  opinion 
that  it  should  be  disallowed.  It  has  been  stated, 
indeed,  that  nothing  has  a  greater  deterrent  effect  on 
a  department  than  the  fear  of  having  to  go  before  the 
Public  Accounts  Committee,  and  that  the  accounting 
department  stands  more  in  awe  of  this  Committee 
than  of  the  House  of  Commons  itself,  probably  be- 
cause there  is  less  chance  of  escaping  its  close  scru- 
tiny. The  Chairman  of  the  Committee  expressed  the 
same  opinion  to  the  House.  "There  is,"  he  said,  "a 
great  deal  of  human  nature  in  the  world,  and  fear  is 
one  of  the  greatest  helps  in  keeping  men  straight. 
The  fear  of  the  Public  Accounts  Committee,  and  the 
;  i  very  searching  examination  that  takes  place  there, 
\j  I  does  a  great  deal  to  keep  in  the  path  of  rectitude  the 
members  of  the  civil  service.'' 

1  The  Principles  and  Practice  of  the  System  of  Control  over  Parlia- 
mentary Grants,  p.  112. 

174 


AUDIT  OF  PUBLIC  ACCOUNTS 

As  has  been  pointed  out,  the  PubHc  Accounts  Com- 
mittee of  the  Canadian  House  of  Commons  has  not 
proved  as  efficient  an  organ  of  control  as  has  its  British 
prototype,  but  there  can  be  no  question  but  that  what 
Durell  has  to  say  of  the  latter  has,  none  the  less,  a  con- 
siderable application  to  the  former. 

It  should  be  borne  in  mind,  however,  that  whatever 
changes  may  be  made  in  the  direction  of  increasing  the 
efficiency  of  the  Public  Accounts  Committee,  economy 
can  better  be  enforced  by  stopping  useless  expenditures 
beforehand  than  by  having  the  committee  bring  the  facts 
in  regard  to  them  to  light  after  they  have  been  made. 

In  this  view,  closer  attention  by  Parliament  to  the 
Estimates  is  greatly  to  be  desired.  As  was  recently  re- 
marked : 

Is  there  a  better  way,  after  all,  to  stay  improper 
expenditure  than  to  stop  the  sources  of  its  origin? 
The  Estimates  of  the  Canadian  ParHament  is  the 
book  to  read  and  to  revise,  if  we  want  to  bring  about 
reforms  in  public  expenditures,  the  reduction  of 
patronage  evils  and  generally  poHtical  and  commer- 
cial corruption;  for  political  life  is  not  alone  in  need 
of  regeneration  in  Canada.^ 

1  Mr.  A.  K.  Maclean — Can.  Hansard,  1916,  p.  936. 


175 


CHAPTER  XI 
THE  SYSTEM  OF  FINANCIAL  REPORTS 

For  information  regarding  the  national  finances  the 
ParHament  and  people  of  Canada  have  available  the 
data  contained  in  four  annual  publications:  the  ''Esti- 
mates," "Public  Accounts  for  the  Fiscal  Year/'  ^'Report 
of  the  Auditor  General  for  the  Fiscal  Year,"  and 
''Budget  Speech  of  the  Minister  of  Finance." 

The  Estimates.  The  character  of  the  data  con- 
tained in  the  Estimates  has  already  been  described  and 
illustrated  by  the  reproduction  of  typical  tables.  It  is 
sufficient  here  to  say,  therefore,  that  the  estimates  proper 
are  shown  in  comparison  with  the  estimates  for  the  pre- 
ceding year.  The  comparison  thus  made  is  of  interest 
and  importance.  It  should  be  noted,  however,  that  the 
showing  is  one  purely  of  estimates  and  appropriations 
and  not  of  actual  expenditures.  The  book  of  Estimates, 
furthermore,  contains  nothing  in  the  way  of  a  statement 
of  revenues  or  of  resources  and  liabilities.  It  thus  has 
in  no  sense  the  character  of  a  budget  in  the  proper  ac- 
ceptation of  that  term. 

Public  Accounts  for  the  Fiscal  Year.  The  Public 
Accounts  for  the  Fiscal  Year  is  an  annual  report  made 
by  the  Minister  of  Finance  in  accordance  with  the  fol- 
lowing provisions  of  the  Consolidated  Revenue  and 
Audit  Act : 

An  annual  statement  shall  be  prepared  as  soon  as 
possible  after  the  termination  of  each  fiscal  year 
exhibiting — 

(a)    the  state  of  the  public  debt  and  the  amount 

176 


SYSTEM  OF  FINANCIAL  REPORTS 

chargeable  against  each  of  the  public  works  for  which 
any  part  of  the  debt  has  been  contracted; 

(b)  the  state  of  the  Consolidated  Revenue  Fund 
and  the  various  trusts  and  special  funds  under  the 
management  of  the  Government  of  Canada; 

(c)  such  other  accounts  and  matters  as  are  re- 
quired to  show  what  the  liabilities  and  assets  of 
Canada  really  are  at  the  date  of  such  statement. 

The  Minister  of  Finance  shall  cause  an  account  to 
be  prepared  and  submitted  to  the  Auditor  General  on 
or  before  the  thirtieth  day  of  June  in  every  year  show- 
ing the  issues  made  from  the  Consolidated  Revenue 
Fund  in  the  fiscal  year  ended  on  the  thirty-first  day 
of  March  preceding  for  services  directly  vmder  his 
control. 

Such  accounts  and  the  reports  of  the  Auditor 
General  thereon  shall  be  laid  before  the  House  of 
Commons  by  the  Minister  of  Finance  on  or  before 
the  thirty-first  day  of  October  next  following,  if 
ParHament  is  then  sitting,  or,  if  not  sitting,  then 
within  one  week  after  Parliament  is  next  assembled. 

The  Deputy  Minister  of  Finance  shall  prepare  and 
submit  to  the  Minister  of  Finance  the  public  accounts 
to  be  annually  laid  before  Parliament. 

The  reports  called  for  by  the  foregoing  provisions  are 
laid  before  the  House  of  Commons  in  a  single  volume 
entitled  "Canada — Public  Accounts  for  the  Fiscal  Year 
Ended  March  31,  ."  This  report,  which  corre- 
sponds to  the  ''Finance  Report"  of  the  British  govern- 
ment, contains  an  exceptionally  complete,  compact  and 
clearly  presented  exposition  of  the  condition  of  the 
treasury  at  the  date  of  its  rendition  and  of  the  financial 
operations  of  the  year  just  ended. ^ 

The  following  table  of  contents,  taken  from  the  re- 

^  The  report  for  1916  consisted  ©f  a  compact  octavo  volume  of 
268  pages. 

177 


THE  CANADIAN  BUDGETARY  SYSTEM 

port  for  the  year  191 6,  will  show  the  general  scope  and 
character  of  information  furnished  by  this  volume. 

TABLE  OF  CONTENTS 
Report  of  the  Deputy  Minister  of  Finance 

Ordinary  Receipts  and  Payments 

Capital  and  Special  Expenditures 

Savings  Banks 

Investments 

Debt 

Loans 

War  Account  Expenditures  by  Departments 

War  Account  Expenditures  by  Militia  Department 

Railway  Securities  Guaranteed  by  the  Dominion 

Dominion  Notes 

Statement  of  Account — Grand  Trunk  Pacific  Railway 
Company 

Statement  of  Account — Canadian  Northern  Railway 
Company 

Statement  of  Account — Canadian  Northern  Ontario 
Railway  Company 

Statement  of  Account — Canadian  Northern  Alberta 
Railway  Company 

Statement  of  Account — Decayed  Pilots  Funds 

Number  of  Officials,  etc.,  under  Superannuation  and 
Retirement  Acts. 

Dominion  Note  Circulation 

Dominion  Notes  Issued  and  Redeemed  and  in  Circula- 
tion 

Dominion  Notes  Issued  to  Assistant  Receiver  General 

Dominion  Notes  Withdrawn  from  Circulation  and  De- 
stroyed 

178 


SYSTEM  OF  FINANCIAL  REPORTS 

Dominion  Notes,  Circulation  from  March  31,  1882  to 

March  31,  1916 
Canadian  Gold  Coin  Issued  by  the  Mint  to  March  31, 

1916 
Silver  and  Bronze  Coinage  for  Canada  from  1858  to 

1916 
Deportation  of  American  Coinage  from  April  i,  1910  to 

March  31,  1916 
Silver  Recoinage  Statement 
Copper  Recoinage  Statement 

PART  I 

Balance  Sheet 

Receipts  and  Payments 

Miscellaneous  Statements 

Balance  Sheet,  Dominion  of  Canada,  March  31,  1916 

Statement  of  Receipts  and  Payments  of  Canada  Fiscal 

Year,  1916 
Statement  of  Consolidated  Fund  March  31,  19 16 
Cash  Account  Fiscal  Year  19 16 
Funded  Debt  Payable  in  London,  March  31,  1916 
Funded  Debt  Payable  in  Canada,  March  31,  1916 
Sinking  Fund  of  Canada,  March  31,  19 16 
Loans  Authorized  and  Redeemed,  March  31,  191 6 
Summary    Statement    of    Revenue   and    Expenditures, 

1867  to  1916 
Debt  of  Canada  from  July  i,  1867  to  March  31,  1916 
Receipts  and  Expenditures  on  Account  of  Consolidated 

Fund,  1868  to  19 1 6 
Summary  of  Liabilities,  1867  to  1916 
Summary  of  Assets,  1867  to  1916 
Detailed  Liabilities,  1867  to  1916 

179 


THE  CANADIAN  BUDGETARY  SYSTEM 

Detailed  Assets,  1867  to  19 16 

Receipts  from  Consolidated  Fund,  1867  to  191 6 

Expenditures  on  Account  of  Consolidated  Fund,  1867 
to  1916 

Debt  of  Canada  Payable  in  London  according  to  Rate 
of  Interest,  1867  to  19 16 

Liabilities  and  Assets  of  Canada  according  to  Rate  of 
Interest,  1867  to  19 16 

Expenditure  on  Capital  Accounts,  Canadian  Pacific 
Railway,  Debts  Allowed  to  the  Provinces  and  North- 
western Territories  Expenditures 

Statement  Accounting  for  Increase  of  Debt,  1867  to 
1916 

Statement  of  Business  of  Post  Office  Savings  Bank, 
1867  to  1916 

Statement  of  Balance  at  Credit  of  Depositors  in  Domin- 
ion Government  Savings  Banks,  March  31,  1916 

Recapitulation  of  Yearly  Transactions  of  Savings 
Banks,  1867  to  1916 

Savings  Banks:  General  Recapitulation,  1867  to  1916 

Comparative  Statement  of  Finance  Department,  1867 
to  1916 

Issue  and  Redemption  of  Dominion  Notes,  July  i,  1878 
-  to  March  31,  1916 

Total  Amount  Paid  to  Each  Railwav  on  Account  of 
Railway  Subsidies,  1884  to  1916 

PART  II 

Revenue  Statements 

Comparative  Statement  of  Revenue  by  Services,  191 5 

and  1916 
Customs  Revenue,  Expenses  of  Collection,' etc.,  1916 
Fines  and  Forfeitures  including  Seizures,  1916 

180 


SYSTEM  OF  FINANCIAL  REPORTS 

Premiums,  Discount  and  Exchange  Revenues,  1916 

Interest  on  Investments,  1916 

Casual  Revenue,  191 6 

Receipts  on  Account  of  Superannuation,  19 16 

PART  III 

JEXPENDITURE    STATEMENTS 

Interest  on  Public  Debt,  19 16 

Sinking  Funds,  1916 

Charges  of  Management,  1916 

Redemption  of  Debt,  1916 

Premiums,  Discount  and  Exchange  Expenditure,  19 16 

Superannuation  Payments,  19 16 

Expenditures  by  Services,  191 6 

Intercolonial  Railway,  Revenue  and  Working  Expenses, 
1916 

Prince  Edward  Island  Railway,  Revenue  and  Working 
Expenses,  191 6 

National  Transcontinental  Railway,  Revenue  and 
Working  Expenses,  19 16 

Saint  Johns  and  Quebec  Railway,  Revenue  and  Work- 
ing Expenses,  191 6 

International  Railway  of  New  Brunswick,  Revenue  and 
Working  Expenses,  19 16 

New  Brunswick  and  Prince  Edward  Island  Railway, 
Revenue  and  Working  Expenses,  191 6 

Indian  Fund,  19 16 

Province  Accounts,  191 6 

Provincial  Subsidy  Accounts,  1916 

The  first  point  to  strike  the  attention  of  the  person  in- 
terested in  the  finances  of  the  Dominion  is  the  care  taken 
to  show  the  financial  resources  and  obligations  of  the 

181 


THE  CANADIAN  BUDGETARY  SYSTEM 

Dominion  by  means  of  a  general  balance  sheet  and  sum- 
mary, and  detailed  statements  of  treasury  assets  and 
liabilities.  In  these  statements  no  attempt  is  made  to 
list  and  value  all  public  property  but  only  that  which 
may  be  termed  a  treasury  asset  in  that  it  consists  of 
cash,  securities,  or  public  works,  the  product  of  capital 
outlays. 

A  second  feature  of  importance  is  the  detail  with 
which  the  revenues  and  expenditures  of  the  Dominion 
are  shown. 

Finally,  the  report  has  the  great  value  of  giving  all 
the  more  important  summaries  in  the  form  of  tables 
showing  the  figures  for  each  year  since  the  establish- 
ment of  the  Dominion  in  1867.  It  is  thus  possible  to 
determine  not  only  treasury  conditions  and  operations 
for  the  year  just  closed,  but  those  conditions  and  opera- 
tions in  comparison  with  the  corresponding  figures  for 
prior  years. 

Report  of  the  Auditor  General  for  the  Fiscal  Year. 

In  addition  to  the  report  of  Public  Accounts  which, 
though  in  large  part  prepared  by  the  Auditor  General, 
is  submitted  to  Parliament  by  the  Minister  of  Finance, 
the  Auditor  General  is  required  by  the  following  pro- 
vision of  the  Consolidated  Revenue  and  Audit  Act  to 
submit  directly  to  the  House  of  Commons  a  certified  re- 
port upon  the  state  of  the  several  appropriation  accounts : 

On  or  before  the  thirtieth  day  of  June  in  every  year, 
accounts  of  the  appropriation  of  the  several  supply 
grants  comprised  in  the  Appropriation  Act,  or  in  any 
other  Act,  for  the  year  ending  thirty-first  March  then 
last,  shall  be  prepared  by  the  several  departments  and 
be  transmitted  for  examination  to  the  Auditor  Gen- 
eral and  to  the  Deputy  Minister  of  Finance,  and, 

182 


SYSTEM  OF  FINANCIAL  REPORTS 

when  certified  and  reported  upon,  as  hereinafter 
directed,  they  shall  be  laid  before  the  House  of  Com- 
mons; and  such  accounts  shall  be  called  the  appro- 
priation accounts  of  the  moneys  expended  for  the 
services  to  which  they  respectively  relate. 

The  nature  of  the  appropriation  accounts  submitted  in 
accordance  with  this  provision  may  be  seen  from  the  fol- 
lowing extracts  from  the  Report  of  the  Auditor  General 
for  19 1 6.  First  is  presented  a  summary  of  the  appro- 
priation accounts  under  two  heads,  relating  respectively 
to  appropriations  under  the  regular  supply  bill  and  to 
those  under  permanent  or  special  statutes.  They  are  as 
follows : 


1B3 


THE  CANADIAN  BUDGETARY  SYSTEM 


SUMMARY  OF  GRANT  AND  EXPENDITURE  UNDER  SUPPLY  BILL.  1915-16 


SERVICE 


Page 


Grant 


Expenditure 


Grant 
Not  Used 


Grant 
Exceeded 


-Con- 


Administration  of  Justice. . 

Adulteration  of  Food ..... 

Arts  and  Agriculture 

Charges  of  Management.  . 

Civil  Government — Sala- 
ries  

Civil     Government 
tingencies 

Customs 

Dominion  Lands  and  Parks 

Dominion  Police 

Excise 

Fisheries 

Government  of  Northwest 
Territories 

Government  of  Yukon  Ter 
ritory 

Immigration 

Indians 

Labour 

Legislation 

Lighthouse  and  Coast  Ser- 
vice  

Marine  Hospitals 

Mail  Subsidies  and  Steam- 
ship Subventions 

Militia  and  Defense.  . 

Mines  and  Geological  Sur- 
vey  

Miscellaneous 

Naval  Service 

Ocean  and  River  Service . . 

Penitentiaries 

Pensions 

Post  Office 

Public  Works — Capital .  .  . 

Public  Works  —  Capital 
(Marine) 

Public  Works  Consolidated 
Fund 

Public  Works— Collection 
of  Revenue 

Quarantine 

Railways  and  Canals — 
Capital 

Railways  and  Canals — 
Con.  Fund 

Railways  and  Canals — 
Coll.  of  Rev 

Royal  Northwest  Mounted 
Police 

Scientific  Institutions 

Steamboat  Inspection.  .  .  . 

Trade  and  Commerce.  .♦. . . 

Weights  and  Measures, 
Gas  and  Electric  Light 
Inspection 


L-2 
1-2 
A-2 

F-2 


D-2 
K-2 
L-2 
1-2 
0-2 

K-2 

K-2 
K-2 
H-2 
M-2 

N-2 

0-2 
0-2 

Z-2 
P-2 

Q-2 


R-2 
0-2 
L-2 


S-2 
V-2 

0-4 

V-4 

V-4 
A-2 

W-5 

W-5 

W-5 

X-2 
0-2 
0-2 
Z-2 

1-2 


$   cts. 

90,933  34 

53,000  00 

3,308,000  00 

508,950  00 

5,672,118  75 


1.140,138  00 
4,215,000  00 
3,732.566  33 
128,765  00 
1,167,425  00 
1 , 405 , 500  00 

8,000  00 

353,000  00 

1,875,000  00 

2,058,638  00 

73,000  00 

1.056,986  50 

2,431,115  00 
78,000  00 

2,641,234  00 
6,039,650  00 


548,525  80 

797,950  00 

2,390,400  00 

1,256,982  98 

979,700  00 

2,108,069  57 

16.678,527  89 

10,334,200  00 


2,498 
23,308 

956 

248 

33.337 

876 

17,128 

1,403 

483 

83 

3.957 


,000  00 

,483  99 

,500  00 
,000  00 

.275  00 

,397  33 

,900  00 

,691  00 
,873  00 
,265  00 
.495  33 


I   cts. 

75,122  33 

44,721  51 

2,567.023  32 

434,991  87 

5.205,545  90 

946,244  07 
3,685,399  40 
3.418,297  80 
116,664  54 
897,671  34 
956,562  24 

5,232  08 

344,575  39 

1.307,480  46 

1,980.784  48 

56,741  58 

913,606  48 

1,937,759  08 
66,740  80 

1,680,088  04 
4,663,052  87 

462,787  33 

691,225  36 

1,154,426  27 

1,213,917  52 

903,318  11 

336,331  83 

16,009,138  77 

6,512.217  97 


1.937 

12,005 

857 
203 

26,381 

622 

16,472 

1,395 

463 

64 

1.906 


,090  48 

,645  24 

,877  09 
,308  69 

,116  78 

,090  43 

,085  84 

,022  45 
,494  42 
,884  01 
,150  43 


$   cts. 
15,811  01 

8,278  49 

740,976  68 

73.958  13 

466,572  85 

193,893  93 

529,600  00 

314,268  53 

12,100  46 

269,753  66 

448,937  76 

2,854  92 

8,424  61 

567,519  54 

77,991  70 

16.258  42 
143,915  29 

493.355  92 

11.259  20 

961,145  96 
1.391,649  83 


85 

106 

1,235 

43, 

104, 

1,771 

669 

3,821 


738  47 
832  28 
973  73 
065  49 
478  78 
737  74 
389  12 
982  03 


560,909  52 
11,302.838  75 


98. 
44, 

6,980, 

254, 

656, 

8. 

20, 

18, 

2,051. 


765  22 
691  31 

858  19 

306  90 

814  16 

668  55 
378  58 
380  99 
344  90 


87  00 


138   18 
535  27 


15.052   70 

107  64 

28.096  89 


142  31 
24,699  97 


376,950  00 


305.215  24 


71.734  76 


Advances  to  be  Repaid 
(See  Note  on  page  b-14.) 

Voted  under  Immigration; 
and  charged  to  open 
account 


157,790,206  81 


2,963,000  00 


121.201,649  84 


36,657,416  96 


2,963,000  00 


68,859  99 


160,753,206  81 


121,201,649  84 


39,620,416  96 


68,859  99 


184 


SYSTEM  OF  FINANCIAL  REPORTS 

SUMMARY  OF  EXPENDITURE  UNDER  SPECIAL  STATUTES 


SERVICE 

Page 

Expenditure 

Administration  of  Justice 

L-2 
A-2 
F-2 
F-2 

«      cts. 

1,402,116  10 

885,130  44 

535  41 

3,160.556  55 

257.066  66 

158.741  05 

209.549  00 

21.421.584  86 

266,756  78 

88,669  23 

18,450  12 

462,668  75 

334,801  42 

296,308  70 

21  920  46 

Arts  and  Agriculture 

Charges  of  Management  (Administration  of  the  Currency  Act) 

Charges  of  Management  Loan  Account 

Civil  Government 

Fishing  Bounty 

0-2 
H-2 
F-2 
N-2 
Z-2 
P-2 

Indians 

Interest  on  Public  Debt '....'.." 

Legislation 

Mail  Subsidies  and  Steamship  Subventions '..'..' 

Militia  and  Defence 

Miscellaneous 

Pensions 

Premium,  Discount  and  Exchange 

■  F-2    ■ 
V-2 
V-4 
V-4 
W-5 

Public  Works— Capital— Exchequer  Court  Awards 

Public  Works —  Income — Exchequer  Court  Awards 

9  397  86 

Public  V/orks — Income — Collingwood  Dry  Dock 

24  208  96 

Railways  and  Canals — Capital 

3   354  499   12 

Railways  and  Canals — Capital — Exchequer  Court  Awards 

360  105  69 

Railways  and  Canals — Income 

W-5 
W-S 
W-S 
F-2 
F-2 
F-2 
Z-2 
Vol.  IV. 

96,579  99 
4  305  743  84 

Railways  and  Canals — Collection  of  Revenue 

Railway  Subsidies 

1,400.171  42 

11,451,673  28 

1,773,021   11 

454   ^42  04 

Subsidies  to  the  Provinces 

Sinking  Funds 

Superannuation 

Trade  and  Commerce — Bounties 

109  236  68 

War  Account  (a) 

166   197  755  47 

Recapitulation 

218,521.590  99 

121,201.649  84 
218,521  590  99 

Expenditure  under  Special  Statutes 

339,723.240  83 

(a)  Grant  5  Geo.  V.  chap.  23,  $100,000,000.00:  overdraft,  $66,197,755.47;  overdraft  in 
1914-15,  see  Auditor  General's  Report,  page  b-3,  $10,750,476.01.  Over-expenditure  in  each 
case  covered  by  6-7  Geo.  V.,  chap.  28. 

The  special  statutes  referred  to  in  the  foregoing  sum- 
mary are,  with  one  exception,  more  or  less  permanent 
provisions  fixing  salaries,  charges  and  other  items,  the 
expenditure  of  which  is  mandatory.  These  statutes  are 
not,  therefore,  properly  appropriation  acts;  nor  are  the 
summary  of  expenditures  under  them  and  its  supporting 
statements  properly  appropriation  accounts.  This  is 
clearly  indicated  by  the  form  in  which  they  are  pre- 
sented, merely  that  of  expenditure  summaries,  without 
any  of  the  information  as  to  grants  which  is  given  in 

185 


THE  CANADIAN  BUDGETARY  SYSTEM 

the  accounts  of  expenditures  under  the  supply  bill. 
They  are  presented  with  the  appropriation  accounts 
merely  for  the  sake  of  completeness. 

An  exception  to  this  statement  is,  however,  found  in 
the  last  item  of  the  summary  of  expenditures  under 
special  statutes,  the  "War  Account,"  which  embraces 
over  $166,000,000  of  the  $218,000,000  so  expended 
The  special  character  of  this  account,  as  a  true  appro- 
priation account,  is  recognized  in  the  table  by  the  foot- 
note appended  to  it,  showing  the  excess  of  the  expendi- 
ture over  the  appropriation.  . 

The  form  of  presentation  of  the  certified  appropria- 
tion accounts  proper  is  illustrated  by  the  subjoined  table. 
It  will  be  observed  that  the  grouping,  the  order  and  the 
wording  of  the  items  in  the  appropriation  accounts  are 
those  employed  in  the  Estimates  and  in  the  appropriation 
act,  although  the  vote  numbers  found  in  those  documents 
are  not  reproduced.  The  addition  to  each  account 
proper  of  a  statement  of  statutory  expenditures  under 
the  same  head  has  already  been  referred  to. 


186 


SYSTEM  OF  FINANCIAL  REPORTS 


APPROPRIATION  ACCOUNT— LEGISLATION 


Grant 


Expenditure 


Grant 
Not  Used 


Grant 
Exceeded 


Senate — 

Salaries  and  Contingencies 

House  of  Commons — 

Salary  of  Deputy  Speaker 

Salaries  of  officers 

Expenses  of  committees,  etc 

Contingencies 

Debates 

Sergeant  at  Arms — Estimates  of 

For  payment  of  full  sessional  indem- 
nity    of     members — days      lost 
through  absence  caused  by  illness 
Library  of  Parliament — 

Salaries 

Books  for  general  library 

Books  for  Library  of  American  History 

Contingencies 

General — 

Printing,  printing  paper  and  binding 

*Printing,    binding    and    distributing 
the  Annual  Statutes 

Contingent    expenses    in    connection 
with  voter's  list 

Contingencies   of   the    Clerk   of   the 
Crown  in  Chancery 

Provincial  voters'  lists 


Under  Statute 

Senate — 

Salary  of  the  Speaker 

Indemnity  and  travelling  expenses. 
House  of  Commons — 

Salary  of  Speaker 

Indemnity  and  travelling  expenses. 
General — 

Elections 

Controverted  elections 


%        cts. 

114,716  50 

2.000  00 
207,587  50 
99,700  00 
51,550  00 
60,000  00 
78,312  50 

19,000  00 

31,550  00 

16,000  00 

1,000  00 

13,070  00 

300,000  00 

10,000  00 

33,000  00 

5.000  00 
14.500  00 


$    cts. 

104,811  55 

2,000  00 
199,007  86 
34,382  11 
44,973  75 
59,035  46 
52,141  25 

(a) 

29.756  16 

16,457  47 

849  74 

8,172  60 

300,077  80 

9,921  59 

32,962  93 

4,977  70 
14.078  51 


$   cts. 
9,904  95 


8,579  64 
65.317  89 

6,576  25 

964  54 

26,171  25 


19,000  00 
1,793  84 


150  26 
4.897  40 


457  47 


77  80 


78  41 
37  07 


22  30 
421  49 


1,056.986  50 


913,606  48 


4,000  00 
56,500  20 

3,574  42 
174,838  40 

27,819  76 
24  00 


143,915  29 


535  27 


Summary 


Under  Supply  Bill. 
Under  Statutes. . . 


1,056.986  50 


266,756  78 


913,606  48 
266,756  78 


1,056,986  50  1,180,363  26 


(o)  Expenditure  includes  with  Indemnity — Under  Statute. 
These  accounts  have  been  examined  under  my  direction,  and  are  correct. 

J.  Eraser, 
Auditor  General, 
Examined, 

E.  E.  Stockton. 
J.  W.  Reid. 


187 


THE  CANADIAN  BUDGETARY  SYSTEM 

The  statute  requires  the  departments  to  submit  to  the 
Auditor  General  in  connection  with  their  appropriation 
accounts,  "a  balance  sheet  so  prepared  as  to  show  the 
debit  and  credit  balances  in  the  ledger  of  such  depart* 
ment  on  the  day  when  the  said  appropriation  account 
was  closed,  and  also  so  prepared  as  to  verify  the  bal- 
ances appearing  upon  the  annual  appropriation  account ;" 
and  "an  explanation  showing  how  the  balances  on  the 
grant  included  in  the  previous  report  have  been  ad- 
justed, and  ...  an  explanatory  statement  of  any  ex- 
cess of  expenditure  over  the  grants  included  in  the  ac- 
count." These  accompanying  statements  are  not,  how- 
ever, required  by  the  statute  to  be  transmitted  to  Parlia- 
ment, and  therefore  they  do  not  appear  in  the  report  of 
the  Auditor  General. 

In  view  of  the  failure  of  the  report  to  exhibit  these 
statements  which,  while  not  required  by  the  statute  to 
be  transmitted  to  Parliament,  are  yet  so  highly  pertinent 
to  the  appropriation  accounts,  it  is  the  more  noteworthy 
that  there  are  appended  to  the  report  proper — the  appro- 
priation accounts — extensive  and  detailed  statements  of 
revenue  and  expenditure. 

The  EngHsh  audit,  and  what  was  formerly  the 
Auditor  General's  audit,  would  simply  give  a  state- 
ment of  the  salaries  or  disbursements,  state  what 
amount  over  or  what  amount  under  the  grant,  and 
if  at  any  time  he  found  that  there  was  a  theft  of  money 
or  any  wrong  in  any  way,  he  would  simply  make  a 
note  of  it  and  call  the  attention  of  the  House  to  it. 
But  this  report  goes  very  much  further.  It  is  a  dis- 
play of  items  which  have  nothing  to  do  with  an  audit.' 

When  the  Auditor  General  started  he  started  on 
the  English  system  and  his  reports  were  in  that  form. 

1  Mr.  Foster — Can.  Hansard,  1895,  p.  2434, 

188 


SYSTEM  OF  FINANCIAL  REPORTS 

Let  any  honorable  gentleman  take  the  report  for 
1879,  ^^d  ^  number  of  succeeding  years,  and  read 
them,  and  he  will  see  the  English  system  copied 
exactly.  In  those  days  when  he  came  to  any  depart- 
ment, he  simply  stated  the  nature  of  the  expenditure, 
how  much  less  than  granted,  or  how  much  more  than 
granted,  and,  if  everything  was  in  proper  form,  gave 
his  certificate.  If  there  was  anything  wrong  with 
the  account,  he  made  a  note  of  it.  I  have  here  the 
audit  for  the  British  Parliament  for  1891  and  1892. 
Take,  for  instance,  the  expenditure  on  royal  parks 
and  gardens.  You  have  a  statement  of  the  salaries, 
the  grant  that  was  made,  what  was  spent  less  than 
was  granted,  or  what  was  spent  more  than  was 
granted,  under  the  different  items,  and  the  certificate 
of  the  Auditor  General  to  that  effect.  But  when  we 
take  the  report  of  the  Auditor  General  of  the  Domin- 
ion for  1894,  or  any  other  of  his  reports  of  late  years, 
we  find  that  it  is  much  more  than  an  audit;  it  is  a 
display  of  every  item  of  expenditure  and  revenue 
down  to  its  minutest  detail,  so  far  as  his  staff  have 
the  time  to  gather  it  up." 

The  characterization  just  quoted  is  indeed  borne  out 
by  the  report  of  the  x\uditor  General  for  191 5-16.  The 
appropriation  accounts  comprise  but  fifty-four  of  the 
well-nigh  1500  pages  of  the  report.  With  minor  ex- 
ceptions ^  the  remaining  pages  are  taken  up  with  state- 
ments of  revenue  and  expenditure  in  which  the  trans- 
actions of  the  several  departments  are  presented  with  a 
degree  of  itemization  seldom  found  in  documents  deal- 
ing with  national  finances.     Both  revenue  and  expendi- 

^  Mr.  Foster— Can.  Hansard,  1895,  p.  2433. 

2  The  report  also  contains  a  reproduction  of  certain  correspondence 
between  the  Auditor  General  and  other  officers  of  the  government 
relative  to  certain  disputed  contract  payments;  a  set  of  miscellaneous 
tables  showing  advertising,  printing,  and  legal  expenses;  a  summary 
of  departmental  salaries  at  Ottawa,  and  a  statement  of  arrears  due 
the  government  from  various  sources. 

189 


THE  CANADIAN  BUDGETARY  SYSTEM 

ture  reports  are  first  presented  in  summarized  form  and 
are  then  supported  by  detailed  tables.  The  form  of 
these  summary  and  detailed  statements  has  so  direct  a 
bearing  on  one  of  the  main  problems  of  the  present 
study — that  of  determining  the  extent  to  which  the  sys- 
tem of  accounting  and  reporting  gets  before  Parliament 
and  the  people  the  information  needed  by  them  for  the 
proper  consideration  of  those  finances — that  we  have 
thought  it  warrantable  to  describe  them  at  some  length 
and  to  reproduce  the  summaries  in  full. ' 

Both  revenue  and  expenditure  summaries  are  classi- 
fied by  ''services,"  "^  and  by  departments.  The  revenue 
summaries  show  only  the  revenue  accruing  to  the  Con- 
solidated Fund.     They  are  as  follows : 


^  For  greater  clarity  in  the  present  discussion  of  these  summaries, 
the  order  of  their  presentation  in  the  report  is  departed  from,  and  their 
captions  are  in  some  cases  modified. 

2  The  term  "services,"  as  used  in  connection  with  revenues  in  the 
report,  has  a  meaning  different  from  that  attaching  to  it  in  connection 
with  appropriations  and  expenditures.  (See  p.  89.)  Jt  refers  to  a 
source  of  revenue  which  may  or  may  not  be  coincident  with  a  single 
"service." 

190 


SYSTEM  OF  FINANCIAL  REPORTS 


SUMMARY  OF  CONSOLIDATED  FUND  REVENUE  BY    SERVICES 


1914-15 


SERVICE 


Part         1915-16 


Increase  Decrease 


$ 

19, 

427, 

1,602, 

294, 

9, 

3, 

75.941, 

2,859, 

35, 

82, 

21.382, 

49, 

92, 

8, 

56, 

45, 

517, 

2.980, 

9, 


72, 
96. 
56, 
40, 
27, 
4, 
219, 

44, 

13,046. 

268. 

376. 

11,444, 

415, 


23, 
153, 


cts. 
443  49 
763  14 
619  27 
490  17 
973  00 

114  54 
219  72 
714  59 
579  38 
440 
643  38 
983  12 
636  12 
757  02 
878  75 
841  30 
561  77 
034  63 
246  87 
788  25 
676  00 

524  89 
747  67 
596  07 
282  36 
281  68 
409  64 
Oil  49 

546  67 
664  68 
,572  33 

,366  72 
,873  14 
,495  44 

,169  22 
,213  55 

,717  24 

,468  92 

,419  81 
,262  71 

,707  38 
,366  22 
,056  95 


103,322  24 


Canada  Gazette 

Canals 

Casual  Revenue 

Chinese  Immigration 

Civil  Service  Examination 
fees 

Cullers'  Fees 

Customs 

Dominion  Lands 

Dominion  Steamers 

Electric  Light  Inspection. 

Exchequer  Court  Reports, 

Excise 

Fines  and  forfeituies 

Fisheries 

Fisheries — Modus  vivendi 

Gas  inspection 

InsuranceSuperintendence 

Inspection  of  Staples 

Interest  on  Investments. . 

Law'Stamps 

Lighthouse  and  Coast  Ser- 
vice  

Mariners*  Fund 

Methylated  Spirits 

Militia 

Military  College 

Militia  Pensions 

Ordnance  Lands 

Patent  Fees  and  Trade 
Marks 

Penitentiaries 

Post  Office 

Premium  Discount  and 
Exchange 

Public  Works 

Railway — Intercolonial. . . 

Railway  —  Prince  Edward 
Island 

Railway — Windsor  Branch 

Railway  —  Transconti- 
nental  

Railway — St.  John  and 
Quebec 

Railway  —  International 
of  N.  B 

Railway — N.  B.  &  P.  E.  I . 
R.  N.  W.  M.  Police  Pen- 
sions  

Steamboat  Inspection. . . . 

Superannuation 

War  Tax — Inland  Revenue 

War  Tax — Finance 

Weights  and  Measures 


$      cts. 

29,863  38 

446,722  21 

1.328,124  09 

Dr.     31,713  75 


S       cts. 
10,419  89 
Dr.     18,959  07 


10, 

98.649! 
2,299, 

35, 
70, 

22,316, 

81, 

96, 

9, 

46, 

52, 

913, 

3,358, 

11, 


241  50 
737  07 
409  48 
550  47 
070  88 
451  75 
140  68 
645  23 
691  33 
376  26 
912  00 
031  80 
951  27 
616  46 
210  13 
520  15 


268  50 
22^768! 189' 76 


933.662  11 

32.055  21 

3,619  24 

1,033  25 


7,389  50 
396,581  83 
377,963  26 

1,731  90 


274.495  18 
326.203  92 


1.377  47 

560,160  12 

508  50 

11.988  45 

502  70 


10,809  50 


643  00 

72,545  65 

111.846  35 

192,299  61 

35,142  19 

23,512  99 

5.977  02 


20  76 

15,098  68 

135,703  54 


230, 

43, 
18.858, 

233, 

411, 

14,068, 


191  95 
164  82 
690  10 

717  87 
787  29 
791  41 


1.567  38 
11,180  46 

s.sn.bi's'ii 


35,420  57 
2,511,313  14 


390.926  82 


3,758,387  39 
54,765  20 


104, 
50, 

5, 

5, 

31, 

1,536, 

2,083, 

110, 


623  49 
414  34 

330  36 
092  12 
796  94 
837  94 
943  78 
857  25 


3,605,173  84 

33,047  96 

151,759  70 
24,994  53 

67  65 


1.438,780  99 

2.083,943  78 

7,535  01 


33  00 


5,140  17 
3,768  69 


1,381  85 
34.854  46 


24.568  62 
23,169  22 


615  26 
5.569  28 


133.073,481  73 


172,147.838  27 


♦39,07,4,356  54 


*  It  should  be  noted  that  this  figure  represents  the  net  increase,  and  not  the  total  of  the 
several  items  appearing  in  the  "Increase"  column. 


191 


THE  CANADIAN  BUDGETARY  SYSTEM 

SUMMARY  OF  CONSOLIDATED  FUND  REVENUE  BY  DEPARTMENTS 


1914-lS 

Department 

Part 

1915-16 

Increase 

Decrease 

$         Ct9. 

284.998  21 

143  92 

Agriculture 

Archives • 

A 
B 
D 

E 
F 
H 

I 

k 

L 
M 

N 
O 
P 

s 

T 

V 

w 

X 
Y 
Z 

S      cts. 
307.913  31 

S      cts. 
22.915   10 

$      cts. 
143  92 

75  981.453  42 

98,714,302  42 

8,062  50 

5.946.571  41 

50,803  16 

24,218,216  00 

52,951  27 

2.305,770  04 

47.519  34 

22,732,849  00 

6,984  50 

2,263,576  38 

37,710  17 

2.377,497  53 

7.389  50 

1  078  00 

External  Affairs. 

3  682  995  03 

Finance 

13.092  99 

21  840  718  47 

Inland  Revenue 

45.561   77 
3  176  121  84 

InsuranceSuperintendence 
Interior.  . 

870.351  80 

52  479  36 

Justice 

4,960  02 

1.273  82 

1.128   18 

145  64 

11   323  90 

Legislation 

13,949  55 

455,777  33 

292,273  36 

1,824  62 

172,331   76 

18,859,026  97 

§0,672  48 

507,987  34 

19,045,555  06 

5.969  50 

121.654  05 

937.578  62 

2,625  65 

789,635  67 

125.784  72 

634  05 

333,858  34 

Militia  and  Defense 

Mines 

166,488  64 

1.190  57 

36.300  50 

5,811,442  56 

39,121   17 

20.551  40 

6,343,381  96 

623,59 

136.031  26 

13,047  584  41 

Post  Office 

41.551  31 
487  435  94 

Printing  and  Stationery.  . 
Public  Works.  . . 

12,702,173  10 

5,345  91 

125,018  70 

Railways  and  Canals 

RoyalN.W.M.  Police... 

Secretary  of  State 

Trade  and  Commerce .... 

3,364  65 

521.045  93 

416.532  69 

13.073,481  73 

172.147,838  27 

*39,074,356  54 

*  It  should  be  noted  that  this  figure  represents  the  net  increase  and  not  the  total  of  the 
eeveral  items  appearing  in  the  "Increase"  column. 

The  expenditures  are  similarly  summarized  by  ser- 
vices and  by  departments.  Unlike  the  revenue  sum- 
maries, these  summaries  include  expenditures  not  merely 
from  the  Consolidated  Fund  but  also  from  the  capital  and 
other  special  funds,  and  show  the  expenditures  so 
segregated.  On  the  other  hand  they  fail  to  disclose 
increases  or  decreases  over  the  preceding  year.  The 
summaries  for  1915-16  are  as  follows: 


192 


SYSTEM  OF  FINANCIAL  REPORTS 

SUMMARY  OF  EXPENDITURES.  BY  SERVICES 

Total 

Consolidated  Fund  $        eta. 

Administration  of  Justice 1 ,  477 ,  238  43 

Adulteration  of  Food 44,721  51 

Arts  and  Agriculture 3,452, 153  76 

Charges  of  Management 435 ,527  28 

Civil  Government 6,408,856  63 

Customs 3,685,399  40 

Dominion  Lands  and  Parks 3,418,297  80 

Dominion  Police 116, 664  54 

Excise 897,671  34 

Fisheries 1,115,303  29 

Government  of  the  Northwest  Territories 5 ,  232  08 

Government  of  Yukon  Territory 344,575  36 

Immigration 1,307,480  49 

Indians 2,190,333  48 

Interest  on  Public  Debt 21 ,421 ,584  86 

Labour 56,741  58 

Legislation 1,180,363  26 

Lighthouse  and  Coast  Service 1 ,937 ,  759  08 

Marine  Hospitals ".  . .  .  66,740  80 

Mail  Subsidies  and  Steamship  Subventions 1 ,  768 ,  757  27 

Militia  and  Defence 4,681,502  99 

Mines  and  Geological  Survey 462 ,  787  33 

Miscellaneous 1,153,894  11 

Naval  Service 1,154,426  27 

Ocean  and  River  Service 1,213,917  52 

Penitentiaries 903,318  11 

Pensions 671 ,  133  25 

Post  Office 16,009, 138  77 

Premium,  Discount  and  Exchange 296 ,  308  70 

Public  Works,  Consolidated  Fund 12,039,252  06 

Public  Works,  Collection  of  Revenue 857 ,877  09 

Quarantine 203 ,  308  69 

Railways  and  Canals,  Consolidated  Fund 671 ,590  43 

Railways  and  Canals,  Collection  of  Revenue 20,777,829  68 

Royal  Northwest  Mounted  Police 1 ,  395 ,022  45 

Scientific  Institutions 463 ,  494  42 

Sinking  Funds 1 ,  773 ,021  1 1 

Steamboat  Inspection 64,884  01 

Subsidies  to  Provinces 11,451,673  28 

Superannuation 454 ,  342  04 

Trade  and  Commerce 1 ,906, 150  43 

Weights  and  Measures.  Gas  and  Electric  Light  Inspection 305,215  24 


130.241.490  22 


Capital 

Public  Works 6,534, 138  43 

Public  Works  (Marine  Department) 1 ,937,090  48 

Railways  and  Canals 30,095,721  59 

38,566.950  50 

Other  Expenditures 

War  Account .166,197,755  47 

Bounties  on  lead  and  crude  petroleum 109, 236  68 

Charges  of  Management — Loan  Account 3 ,  160, 556  55 

Subsidies  to  Railways 1,400,171  42 

Railway  Grade  Crossing  Fund 47 ,079  99 

170,914,800  11 

Recapitulation 

Consolidated  Fund 130.241,490  22 

Capital 38,566,950  50 

Other  Expenditures 170,914,800  11 

339,723.340  83 


193 


THE  CANADIAN  BUDGETARY  SYSTEM 


SUMMARY  OF  EXPENDITURE.  BY  DEPARTMENTS 


Expenditure  by 
Departments 


Page 


Capital 


Consolidated 
Fund 


Other 
Expenditures 


Total 


Agriculture 

Archives 

Auditor  General  s  Of 

fice 

Civil  Service  Commis- 
sion  

Conservation  Commis- 
sion  

Consulting  Engineer — 
Dom.  Gov't.  . 

Customs 

External  Affairs. .  . 

Finance 

Governor       General's 

Secretary's  Office 

High    Commissioner's 

Office — London.  . 

Indian  Aflfairs 

Inland  Revenue 

Insurance 

Interior 

Justice 

Labour 

Legislation 

Marine 

Militia  and  Defence.  . 

Mines 

Naval  Service 

Post  Office 

Printing  and  Station- 
ery  

Privy  Council 

Public  Works 

Railways  and  Canals. 
Royal     Northwest 

Mounted  Police . 
Secretary  of  State .  .  . 
Trade  and  Commerce 
War  Accounts  by  De- 
partments 
($166,197,755.47) 

Agriculture 

Auditor  General's 

Office 

External  Affairs 

Finance 

Governor       General's 
SecretaT>''s  Office 

Indian  Affairs 

Inland  Revenue 

Interior 

Justice 

Labour 

Legislation 

Marine  and  Fisheries. 
Militia  and  Defence.  . 

Naval  Service 

Post  Office 

Privy  Council 

Public  Works 

Railways  and  Canals. 
Secretary  of  State. . . . 
Trade  and  Commerce. 
War  Purchasing  Com- 
mission  


A-2 
B-2 


C-2 

Y-2 

A-2 

U-2 
D-2 
E 
F-2 

G-2 

F- 
H- 

J-3 
K-2 
L-2 
M-2 
N-2 
0-2 
P-2 
Q-2 
R-2 
S-2 

T-2 

U-2 
V-4 
W-2 

X-2 
Y-2 
Z-2 


,937,090  48 


6,534.138  43 
30.095.721  59 


$ 

4.161, 

no, 

146, 

41, 

126, 

7, 

4.021. 

91, 

36.907, 


cts. 
308  72 
968  93 

724  29 

970  05 

670  60 

535  49 
394  49 
387  48 
414  34 


(a)3. 160.556  55 


138.307  84 


$   cts. 

4.161.308  72 

110.968  03 

146.724  29 

41,970  05 

126.670  60 

7.535  49 

4.021.394  49 

91,387  48 

40,067,970  89 

138,307  84 


54, 

2.323, 

1,400, 

56, 

6,597, 

2.696, 

121, 

1.183, 

3.687, 

5.399, 

773, 

2.463, 

16.858, 

252, 

70, 

13.541, 

21.639, 

1,457. 

117. 

3.792. 


134  14 
771  33 
137  20 
901  17 
530  61 
036  72 
621  85 
175  76 
192  83 
664  20 
640  45 
837  56 
669  63 

348  29 
880  64 
204  35 
547  73 

418  86 
519  92 

574  75 


54, 

2,323, 

1,400, 

56, 

6.597. 

2.696. 

121. 

1.183. 

5.624, 

5,399. 

773. 

2.463, 

16.858. 


134  14 
771  33 
137  20 
901  17 
530  61 
036  72 
621  85 
175  76 
283  31 
664  20 
640  45 
837  56 
669  63 


(6)1,447.251  41 


(c)     109.236  68 


5,077  79 


4 
11 
73 

9, 
5, 
6, 
41, 
1.489, 
1, 


160.433 

3.274 

349 

17 

94 

313 

21 

14 


,439  17 
,211  06 

671  16 

108  81 
688  83 
723  40 
346  13 
201  35 
071  19 
270  00 
529  77 
416  42 
019  94 

672  00 
346  91 
344  04 
740  73 
667  98 
795  40 


29.413  39 


252,348  29 

70.880  64 

20.075.342  78 

53.182.520  73 

1.457.418  86 

117.519  92 

3.901.811  43 


5,077  79 

4,439  17 
11.211  06 
73.671  16 

9.108  81 

5,688  83 

6.723  40 

41.346  13 

1.489.201  35 

1.071  19 

270  00 

1.529  77 

160.433.416  42 

3,274.019  94 

349.672  00 

17.346  91 

94.344  04 

313.740  73 

21.667  98 

14.795  40 

29,413  39 


38.566.950  50 


296.439.245  69 


4.717,044  64 


339.723,240  83 


a  Charges  of  Management.  Loan  Account. 

b  Railway  Subsidies 1 .  400. 171  42 

Railway  Crossing  Fund 47 .079  99 


c  Bounties  on  lead  and  crude  petroleum. 


1,447.251  41 


194 


SYSTEM  OF  FINANCIAL  REPORTS 

In  addition  to  the  foregoing  summaries  of  expendi- 
tures, attention  should  again  be  called  to  the  "Summary 
of  Grants  and  Expenditures,"  already  reproduced  in 
connection  with  the  discussion  of  "Appropriation  Ac- 
counts" showing  the  grant  and  expenditure,  and  the  re- 
sulting balance  or  deficit  for  each  service.  The  great 
value  of  this  statement  as  a  financial  document,  quite 
aside  from  its  use  as  a  summary  of  the  audit  of  appro- 
priation accounts,  needs  no  pointing  out.  It  is,  there- 
fore, somewhat  surprising  to  find  that  no  similar  sum- 
mary is  presented  arranged  by  departments.  The 
absence  of  such  summaries  would  seem  to  constitute  an 
omission  of  vital  financial  information. 

In  support  of  each  item  of  each  of  the  summaries  re- 
produced, there  is  presented  a  detailed  itemization, 
under  the  general  head  of  "Details  of  Expenditure  and 
Revenue."  These  detailed  tables  are  arranged  by  de- 
partments only,  but  the  tables  of  receipts  and  expendi- 
tures for  a  single  department  are  generally  made  use  of 
to  support  both  the  departmental  and  the  service  sum- 
maries. This  is  made  possible  by  the  fact  that  in 
almost  every  case  a  source  of  revenue  is  confined  to  a 
single  department  and  a  service  is  administered  by  only 
one  department.  Thus,  for  example,  the  detailed  tables 
of  revenue  and  expenditure  for  the  Marine  and  Fisheries 
Department  support  not  merely  the  items  in  the  sum- 
maries for  that  department  but  those  for  the  revenues 
from  Dominion  Steamers,  Fisheries,  Mariners  Fund, 
etc.  and  those  for  the  expenditures  for  the  Ocean  and 
Rivers  Service,  the  Lighthouse  and  Coast  Service, 
Steamboat  Inspection,  etc.^  This  use  of  the  tables  is 
facilitated  by  summary  tables  of  revenue  and  expendi- 

195 


THE  CANADIAN  BUDGETARY  SYSTEM 

ture,  under  each  department,  preceding  the  detailed 
tables  and  arranged  under  heads  paralleling  those  used 
in  the  main  summaries;  and  by  the  corresponding 
division  and  arrangement  of  the  detailed  tables. 

The  degree  of  itemization  to  which  these  tables  of 
"Details  of  Expenditure  and  Revenue"  go  has  already 
been  referred  to.  The  names  of  all  permanent  em- 
ployees are  given,  the  length  of  time  served  during  the 
year,  and  the  salary  rate.  Expenditures  for  trifling 
purchases  are  entered  in  detail.  On  the  revenue  side  the 
items  are  alm.ost  equally  replete  with  detail.  The  tables 
thus  extend  over  nearly  1400  closely  printed  pages. 

It  is  hardly  necessary  to  point  out  how  complete  is 
the  information  that  is  presented  by  these  tables  and  the 
detailed  statement  of  the  expenditures  of  the  several  de- 
partments, and  how  thoroughly,  through  their  aid,  the 
financial  operations  of  any  service  may  be  studied.  The 
only  criticism  that  may  be  made  regarding  these  detailed 
tables  is  that  the  items  are  not  always  classified  in  such 
a  way  as  to  bring  out  significant  facts.  Instead  of  being 
classified  according  to  any  principle,  the  items  are  listed 
alphabetically  according  to  the  names  of  payees. 

Budget  Speech  of  the  Minister  of  Finance.     The 

budget  speech  of  the  Minister  of  Finance  is  delivered 

^  Where  a  single  class  of  revenues  is  derived  from  several  depart- 
ments, an  intermediate  schedule  is  given  shov/ing  the  amount  of  such 
revenue  derived  from  each  department,  the  departmental  tables  of 
revenue  in  turn  serving  as  supporting  schedules  to  such  intermediate 
schedule.  This  is  done  in  all  three  such  classes  of  revenue — casual 
revenue,  fines  and  forfeitures,  and  public  works  revenue.  Curiously 
enough,  however,  on  the  expenditure  side,  when  a  single  "service"  is 
distributed  over  several  departments,  no  such  intermediate  schedule 
is  given.  Thus,  for  the  two  "services"  so  distributed — Civil  Govern- 
ment, and  Pensions — the  expenditure  by  departments  can  be  ascer- 
tained only  by  drawing  off  the  figures  given  in  the  detailed  tables 
under  each  department. 

196 


SYSTEM  OF  FINANCIAL  REPORTS 

upon  his  making  the  motion  that  the  Speaker  do  now 
leave  the  chair  for  the  House  to  go  into  Committee  of 
Ways  and  Means.  The  nature  of  this  address  is  shown 
by  the  budget  speech  deHvered  by  the  Minister  of  \ 
Finance,  April  24  of  the  present  year  ( 1917),  which,  for  \ 
purposes  of  illustration,  has  been  reproduced  in  one  of 
the  appendices  to  this  volume. 

It  will  be  seen  by  consulting  this  appendix  that  the 
Minister  of  Finance  makes  no  attempt  in  this  speech  to       ^. 
present*  any  comprehensive  or  detailed  statement  of  the        j 
condition  of  the  finances  or  the  financial  operations  of       |^ 
the  year.     Neither  does  he  in  it  attempt  any  but  the  most       f 
incidental  consideration  of  the  Estimates   as  brought 
forward  by  the  Government.     The  only  point  receiving 
any  careful  attention  is  that  of  the  proposals  of  the  Gov- 
ernment for  the  raising  of  revenue  either  by  way  of 
loans   or   increased   taxation.      In   this    the    Canadian 
budget  speech  corresponds  closely  with  its  prototype, 
the  budget  speech  of  the  British  Chancellor  of  the  Ex- 
chequer. 

It  cannot  but  be  deemed  a  matter  of  regret  that  the 
occasion  of  the  delivery  of  this  speech  is  not  taken  ad-    \ 
vantage  of  by  the  Minister  of  Finance  to  get  before  the 
House   a    full   exposition    of   matters    relating   to    the       ^ 
national  finances,  the  revenues  and  expenditures  of  the     '^ 
government  in  the  past,  the  present  condition  of  the 
public  treasury,  and  the  financial  and  work  program  of 
the  government  for  the  future.     His  failure  to  do  so 
means  that  the  members  of  the  House  and  all  others  in- 
terested in  the  national  finances  are  compelled,  without 
guidance  on  the  part  of  the  authorities  responsible  for 

197 


THE  CANADIAN  BUDGETARY  SYSTEM 

the  conduct  of  public  affairs,  to  resort  to  the  financial 
data  which  is  contained  in  the  original  reports  which 
have  been  described.  Ample  as  these  data  are,  con- 
siderable trouble  and  judgment  is  required  in  order  to 
determine  their  full  purport. 


198 


CHAPTER  XII 

POLITICAL  EVILS   AND   THEIR   EFFECT   ON 
CANADIAN  FINANCIAL  ADMINISTRATION 

In  order  fully  to  understand  the  actual  operation  of 
Canada's  system  of  financial  administration,  certain 
partisan  usages  and  political  evils  which  profoundly 
affect  its  workings  need  to  be  considered. 

The  Spoils  System  and  Patronage  Lists.  While 
civil  service  reform  has  made  some  headway  in  Canada 
and  a  Civil  Service  Commission  modeled  after  those 
found  in  the  United  States  has  been  in  existence  since 
1908,  the  spoils  system  still  flourishes.  So  far  only 
officials  in  the  "inside"  service,  namely,  such  as  are  em- 
ployed in  the  government  departments  at  Ottawa,  have 
a  permanent  tenure  of  office.  In  all  other  cases,  both 
original  appointments  and  promotions  are  governed 
more  or  less  by  party  considerations.  That  the  spoils 
system  still  flourishes  in  Canada  is  evidenced  by  the  fol- 
lowing statements : 

At  Confederation  we  started  out  perhaps  with  the 
idea  that  we  would  not  have  a  political  patronage 
system  at  all,  but  in  two  or  three  years  the  Govern- 
ment, under  the  leadership  of  Sir  John  Macdonald, 
abandoned  these  early  ideals  and  adopted  a  patronage 
system  appHcable  both  to  Government  contracts  and 
supplies  of  goods  to  the  Government  and  to  appoint- 
ments to  public  office.  That  system  was  certainly 
continued  by  the  Mackenzie  administration.  They 
went  out  of  power  in  1878.  During  the  last  years  of 
the  Mackenzie  administration  a  number  of  appoint- 
ments were  made,  some  before  the  Government 
retired  and  some  shortly  after  it  had  retired,  which 

199 


THE  CANADIAN  BUDGETARY  SYSTEM 

were  promptly  annulled  when  the  Conservative  ad- 
ministration took  power.  *  =5=  *  The  spoils  sys- 
tem under  the  Conservatives  had  as  its  cardinal 
principle  that  where  public  money  w^as  to  be  spent 
it  must  be  spent  among  political  supporters.  There 
existed  in  every  department  of  the  Conservative 
administration  what  was  known  as  a  patronage  list, 
kept  under  lock  and  key,  and  upon  it  was  the  name 
of  each  Government  supporter,  each  true  Conserva- 
tive, with  whom  the  Government  desired  to  deal  in 
order  that  when  public  money  was  expended  it  should 
reach  the  pockets  of  the  Government  supporters  to 
the  exclusion  of  others.  In  addition  to  that,  they  had 
their  middlemen,  their  commissions  and  their  paid 
agents.^ 

When  the  Conservatives  came  to  power  in  1878 
they  dismissed  nearly  500  employees  from  the  Inter- 
colonial and  they  replaced  them  the  next  day  with 
their  own  partisans.^ 

On  the  return  of  the  liberal  party  to  power  in  1897  the 
same  practices  were  continued. 

We  have,  in  the  twelve  years  we  have  been  in  office, 
accepted  the  system,  which  has  been  in  existence 
since  Confederation,  of  making  appointments  on 
party  lines.  In  this  we  follow^ed  the  example  set  by 
our  predecessors.^ 

When  my  hon.  friends  opposite  came  into  power 
there  was  not  a  single  man  on  the  Intercolonial 
Railway  who,  for  at  least  a  year  after  the  change  of 
Government,  felt  sure  of  his  position.  *  *  *  Very 
few  of  the  employees  who  were  unorganized,  or  were 
not  backed  by  a  strong  union,  were  kept  in  their 
position.  Section  men  were  dismissed  by  the  w^hole- 
sale.* 

1  Mr.  Guthrie — Can.  Hansard,  1909-10,  p.  2453. 

2  Mr.  Emerson — Can.  Hansard,  1907-08,  p.  9183. 

3  Sir  Wilfrid  Laurier — Can.  Hansard,  1907-08,  p.  9201. 
*  Mr.  Lesperance — Can.  Hansard,  1911-12,  p.  5806. 

200 


POLITICAL  EVILS 

Nor  has  any  considerable  improvement  taken  place 
since  the  present  administration  assumed  office.  Under 
its  regime  13,000  changes  have  occurred  among  the 
45,000  employees  in  the  government  service/ 

We  have  the  statement  on  oath  of  Mr.  W.  H. 
Brown,  the  head  of  the  purchasing  staff  of  the 
Department  of  Militia  and  Defence  that  the  patron- 
age list  on  file  in  his  office  at  Ottawa,  a  list  furnished 
to  him  by  the  supporters  of  the  party  in  power, 
contains  the  names  of  no  less  than  8,000  of  their 
political  favorites.^ 

Outside  of  promotions  of  high  officials,  I  have  no 
hesitation  in  saying  that  as  between  two  men,  other 
things  being  equal,  both  being  qualified,  the  Tory  will 
get  the  job." 

Other  things  being  equal  I  would  expect  the  pur- 
chases to  be  made  from  those  who  are  friends  of  the 
Government.* 

On  both  sides  w^e  have  been  going  on  with  the  idea 
that  the  money  we  get  into  the  public  treasury  is  to 
be  used  for  party  advantage.  What  did  the  Minister 
of  Railways  boldly  say  the  other  night?  He  said: 
*Tf  I  have  advertising  to  give  or  suppHes  to  buy,  I 
will  deal  with  a  friend  of  the  party."  *  *  *  j^ 
means  that  the  money  of  this  country  is  for  the  party 
and  the  Government  to  do  what  it  likes  with;  doing 
fairly  well  if  possible  by  the  country,  but  taking 
mighty  good  care  always  to  help  the  party.^ 

As  between  the  two  great  parties  in  Canada  it 
would  seem  to  me  that  honors  are  about  easy  in  the 

1  Mr.  Devlin — Can.  Hansard,  1916,  p.  353. 

2  Mr.  Sinclair — Can.  Hansard,  1916,  p.  417. 

3  Mr.  Hughes — Minister  of  Militia  and  Defence,  Can.  Hansard, 
1911-12,  p.  5450. 

*  Mr.  Hazen — Minister  of  Marine  and  Fisheries,  Can.  Hansard, 
1914,  p.  415. 

5  Mr.  Foster — Can.  Hansard,  1910-11,  p.  6607. 

201 


/ 


THE  CANADIAN  BUDGETARY  SYSTEM 

sinning   in    connection    with    civil    service    appoint- 
ments/ 

The  following  passage  gives  a  good  picture  of  the 
wide  extent  and  powerful  influence  of  the  party  patron- 
age system. 

The  premier  and  his  selected  councillors  make  up 
the  Ministry,  that  is  the  first;  after  that  comes  the 
caucus  and  its  elected  components;  after  that  comes 
the  local  candidate  in  his  district,  with  his  circle  of 
party  supporters;  and  lower  down  in  the  scale  come 
the  district  committee  with  their  control  of  the  petty 
patronage  which  has  to  be  dispensed  within  the 
purview  of  their  own  jurisdiction.  That  makes  a 
complete  chain.  *  'S^  *  This  is  a  wonderfully  con- 
centrated and  correlated  system.  There  is  not  a 
section  of  the  country  from  one  end  to  the  other 
which  is  not  under  its  influence  and  which  today  is 
not  throbbing  and  pulsating  with  the  stimulus  de- 
rived from  the  party  patronage  system.^ 

Appointments  to  Government  offices  and  the  award- 
ing of  federal  contracts  are  largely  in  the  hands  of  local 
patronage  committees. 

My  honorable  friend  knows  that  when  his  party 
was  in  power,  and  when  other  parties  were  in  power, 
also,  people  in  different  constituencies  would  organize 
themselves  into  patronage  committees  and  make 
representations  to  the  member  from  that  constitu- 
ency, or  to  the  Government  with  regard  to  appoint- 
ments to  office,  and  as  to  and  from  whom  purchases 
should  be  made  and  so  on.^ 

From  one  end  of  Canada  to  the  other  it  is  nothing 
but  politics  and  the  patronage  list.  Why,  down  in 
New  Brunswick,  the  patronage  committee  even  ap- 

1  Mr.  Emerson — Can.  Hansard,  1907-08,  p.  9182. 

2  Mr.  Foster — Can.  Hansard,  1909-10,  p.  2435. 

3  Mr.  Hazen — Can.  Hansard,  1914,  p.  415. 

202 


POLITICAL  EVILS 

points  commissioned  officers  up  to  lieutenants.  If  a 
man  wants  an  appointment  as  lieutenant  in  the 
Province  of  New  Brunswick  he  goes  to  the  patronage 
committee/ 

The  Militia  Department  and  the  Government  have 
allowed  the  matter  of  patronage  in  connection  with 
militia  supplies  to  drift  into  the  hands  of  local  patron- 
age committees.  Although  all  persons,  Liberal  and 
Conservative  alike,  are  doing  their  share  in  the  matter 
of  enlisting  and  recruiting,  sending  their  sons  to  the 
front — both  parties  in  equal  degree,  I  think — and  con- 
tributing to  patriotic  and  Red  Cross  funds,  no  person 
but  one  who  is  on  a  certain  side  of  politics  in  parts 
of  the  country  with  which  I  am  familiar,  can  get 
anything  to  do  at  all/ 

It  is  not  patronage  committees  only  that  we  com- 
plain of,  but  it  is  patronage  lists  that  exist  whenever 
stores  or  supplies  of  any  kind  are  bought.  Almost 
every  official  that  was  examined  before  the  Royal 
Commission  spoke  of  these  lists  as  a  matter  of  course, 
that  of  course  everything  was  bought  with  a  view  to 
politics,  that  no  service  was  performed,  no  person  was 
employed,  no  goods  were  purchased,  as  a  rule,  except 
in  view  of  some  political  advantage  to  the  party.^ 

As  most  Canadian  officials  were  originally  appointed 
on  the  strength  of  party  services  rendered  it  is  natural 
that  they  should  be  tempted  to  continue  their  political 
activities  after  they  have  assumed  office. 

I  quite  acknowledge  that  an  employee  in  the  civil  serv- 
ice may  so  conduct  himself  in  the  course  of  an  election  as 
to  warrant  the  party  he  opposes,  if  successful  in  that 
election,  in  dismissing  him  the  moment  Parliament 
meets.  In  the  hustings  or  in  the  course  of  private  can- 
vass, he  may  personally  abuse  the  leaders  of  the  party  to 

1  Mr.  Carvell — Can.  Hansard,  1916,  p.  1419. 

2  Mr.  Martin — Can.  Hansard,  1916,  p.  3379. 

s  Mr.  Lennox — Can.  Hansard,  1907-08,  p.  9206. 

203 


THE  CANADIAN  BUDGETARY  SYSTEM 

which  he  is  opposed.  He  may  go  to  meetings  and  inter- 
rupt in  such  a  rude  and  offensive  manner,  bringing  with 
him  possibly  a  gang  of  roughs  to  back  up  his  interrup- 
tions, as  to  fully  justify  the  successful  party  in  dispensing 
w4th  his  services  without  delay.  *  *  *  If  it  is  right  and 
proper  for  a  member  of  the  civil  service  to  w^ork  for  the 
Government  of  the  day,  if  he  belongs  to  that  party,  it  is 
equally  right  and  proper  for  him  to  work  for  the  oppo- 
sition if  his  political  opinions  lean  to  their  side." 

The  Intercolonial  Railway  with  some  few  exceptions 
which  I  cheerfully  recognize  is  a  hot  bed  of  political 
propagandism.  The  bitterest  and  most  offensive  parti- 
sans to  be  found  in  Canada  are  to  be  found  in  connection 
with  that  [Government]  road.^ 

When  a  change  of  government  takes  place  active  par- 
ticipation of  this  sort  in  election  campaigns  leads  to  the 
removal  of  the  offending  public  official  on  the  ground  of 
poHtical  partisanship.  The  part  played  by  members  of 
Parliament  in  effecting  such  dismissals  is  recounted 
below : 

I  am  following  the  policy  laid  down  by  the  House. 
When  a  member  charges  that  an  official  has  been  an 
active  partisan  in  his  constituency  I  ask  for  his  dismissal. 
But  in  the  case  of  another  constituency,  where  there  is 
not  a   [Government]   member  to  represent  the  constit- 
uency, if  a  charge  is  made  I  have  an  investigation  and 
if  it  is  proven  that  the  official  has  been  an  active  partisan, 
of  course  he  is  dismissed.^ 
r        I  do  not  think  it  is  edifying  to  see  public  officials, 
I    occupying  places  in  the  Civil  Service,  taking  an  active 
i    part  in  politics,  on  one  side  or  the  other.     If  they  do  so 
I    they  know  full  well  that  they  are,  under  the  resolution 
'    of  the  House,  taking  their  positions  in  their  hands,  and 

1  Mr.  Macdonald — Can.  Hansard,  1896,  2nd  session,  p,  528. 

2  Mr.  Davies — Can.  Hansard,  1896,  2nd  session,  p.  1091." 
2  Mr.  Reid — Can.  Hansard,  1912-13,  p.  8734. 

204 


POLITICAL  EVILS 

they  will  have  no  reason  to  find  fault  should  they  be  dis- 
missed when  a  change  of  government  takes  place/ 

They  (Government  officials)  are  under  the  impression 
that  if  they  do  not  serve  the  Conservative  party,  (in 
power)  they  will  be  turned  out.^ 

As  will  be  pointed  out  later,  the  bestowal  of  govern- 
ment contracts  on  party  favorites  and  the  resultant  ex- 
clusion of  outside  bidders  enhances  the  cost  of  the  pub- 
lic improvements  undertaken  by  the  Dominion  authori- 
ties. The  effect  of  the  spoils  or  party  patronage  system 
on  appointments  to  the  civil  service  has  been  graphically 
pointed  out  by  the  present  Prime  Minister  of  Canada. 

The  present  system  causes  many  abuses  to  flourish. 
In  some  cases  at  least  subordinates  in  the  different  de- 
partments are  appointed  when  they  are  not  required. 
The  head  of  the  department  would  not  select  the  man 
whom  he  is  bound  to  receive  if  he  were  left  to  exercise 
his  own  judgment.  Inefficient  appointments  are  made. 
There  are  useless  men  in  the  departments  in  Ottawa  to- 
day; every  minister  of  the  Crown  knows  that,  'i'  *  * 
Not  only  have  inefficient  appointments  been  made,  but 
places  have  been  created  that  political  supporters  of  one 
party  or  the  other  might  be  satisfied.  The  political  in- 
fluence of  appointees  is  exercised.  That  more  or  less  de- 
stroys discipline.  *  *  *  I  have  been  told  that  there  are 
men  on  the  Intercolonial  today  who  cannot  and  dare  not 
keep  their  subordinates  under  them  in  a  proper  state  of 
discipline  simply  because  they  know  the  effect  which  the 
political  influence  of  these  subordinates,  appointed  by 
political  pull,  can  exercise  upon  them.  Does  that  tend 
to  good  service  or  good  discipline?  Political  support  is 
bartered  for  promise  of  offixe,  and  the  time  of  ministers 
and  members  is  needlessly  and  absurdly  taken  up  with 
patronage.  *  *  *  Members  of  Parliament  on  the  other 
side  of  the  House  have  told  me,  in  some  cases  that  half 

iMr.  Hazen— Can.  Hansard,  1914,  p.  1176. 
2  Mr.  Marcil — Ibid. 

205 


THE  CANADIAN  BUDGETARY  SYSTEM 

their  time,  in  other  cases  that  three-fourths  of  their  time 
was  taken  up  in  deahng  with  matters  of  appointment  to 
pubHc  office/ 

In  consequence  of  the  existing  system  of  favoritism  in 
appointing  persons  to  government  positions,  the  Cana- 
dian civil  service  is  undoubtedly  overmanned. 

The  public  service  is  overmanned  to  a  remarkable  de- 
gree and  on  account  of  this  overmanning,  of  inefficient 
organization,  of  duplication  and  other  kinds  of  waste, 
there  is  a  loss,  conservatively  estimated,  of  over 
$5,000,000  a  year.^ 

Canadian  public  men  have  freely  conceded  that  the 
patronage  system  exerts  a  demoralizing  and  corrupting 
influence  on  the  political  life  of  the  Dominion.  In  a 
farewell  speech  delivered  in  Toronto  on  September  24, 
1878,  the  Earl  of  Duffer  in,  when  retiring  from  the  post 
of  Governor  General  of  Canada,  used  the  following 
weighty  words  concerning  the  importance  of  removing 
the  civil  service  of  the  Dominion  from  the  sphere  of  party 
politics  : 

The  chief  danger  against  which  you  have  to  guard  is 
that  which  concerns  the  civil  service  of  the  country. 
Now  the  civil  service  of  the  country,  though  not  the  ani- 
mating spirit,  is  the  living  mechanism  through  which 
the  body  politic  moves  and  breathes  and  has  its  being. 
Upon  it  depends  the  rapid  and  economical  conduct  of 
every  branch  of  your  affairs.  If  you  take  my  advice 
you  will  never  allow  your  civil  service  to  be  degraded 
into  an  instrument  to  subserve  the  end  and  interests  of 
any  political  party. 

If  there  is  any  laxity  in  the  public  virtue  of  this  coun- 
try today,  if  there  is  any  canker  of  public  corruption,  in 
ninety-nine  cases  out  of  a  hundred  you  can  trace  it  to  the 

1  Mr.  Borden — Can.  Hansard,  1907-08,  p.  9197. 

2  Ottawa  Civilian — Quoted  in  Can,  Hansard,  1915,  p.  1632. 

206 


POLITICAL  EVILS 

baneful  effect  of  political  party  patronage.  *  ^-s^  *  in  the 
whole  course  of  my  political  life  I  cannot  point  to  a  single 
instance  where  political  patronage  ever  helped  the  status 
of  the  bench,  ever  helped  the  status  of  the  civil  service,    | 
ever  helped  in  the  economy  of  public  administration,  ever    i 
helped  a  member  of  Parliament  in  reality:   it  almost 
always  causes  the  dry  rot  and  disintegration  that  breaks 
up  government  after  government  and  party  after  party/ 
Of  good  augury  for  the  future  is  the  fact  that  a  begin- 
ning has  been  made  with  civil  service  reform  by  the 
federal  authorities  in  Canada.     Some  5,000  out  of  a  [ 
total  of  45,000  Dominion  government  employees  are  now  j  ^ 
protected  by  civil  service  rules.     It  only  requires  the  pas-    ■ 
sage  of  an  order  in  council  to  include  all  government 
servants  within  its  sheltering  provisions  and  thus  to  put 
an  end  to  the  whole  spoils  system  as  far  as  appointments 
to  office  are  concerned.     But  so  far  no  ministry  in  office 
has  had  the  courage  to  take  so  bold  a  step.     Even  the 
chance  aft'orded  by  Canada's  participation  in  the  Euro- 
pean war  was  not  taken  advantage  of  to  bring  about  this 
much  needed  reform. 

This  Government  has  been  given  the  greatest  oppor- 
tunity in  the  whole  history  of  this  country,  when  the 
hearts  of  our  people  are  stirred  by  this  grave  issue,  to 
endeavor  to  arrive  at  some  system  by  which  the  public 
men  in  the  country  on  both  sides  will  agree  that  some 
substitute  shall  be  found  for  patronage  evils.^ 

Partisan    Apportionment    of    Government    Con- 
tracts.   It  is  prescribed  by  law  in  Canada  that  no  con-    , 
tracts  of  any  size  for  government  work  shall  be  given    \  ^ 
out  until  after  bids  or  tenders  have  been  asked  for  from     ' 
the  general  public.     If,  however,  the  amount  involved 
is  less  than  $5,000,  bids  may  be  dispensed  with. 

^  Sir  George  E.  Foster — Can.  Hansard,  1916,  p.  949. 
2  Mr.  Macdonald — Can.  Hansard,  1916,  p.  1314. 

207 


THE  CANADIAN  BUDGETARY  SYSTEM 

The  letter  of  the  law  says  you  must  not  give  any  work 
without  calling  for  tenders  for  work  that  costs  more 
than  $5,000,  but  you  can  let  it  by  piecemeal  in  contracts 
under  $5,000.^ 

We  pass  a  law  in  which  we  lay  down  the  principle  that 
these  expenditures  shall  be  made  by  tender  and  contract, 
but  as  a  too  rigid  adherence  to  that  rule  would  sometimes 
lead  to  trouble,  we  make  an  exception  and  provide  if,  in 
the  case  of  an  expenditure  up  to  $5,000,  the  minister  has 
reason  to  believe  that  the  work  could  be  better  or  more 
quickly  done  by  day  labor,  he  makes  his  request  and  gives 
his  reason  to  council,  and  if  the  council  consents  the 
work  is  done  in  that  way.* 

Nominall}^  all  persons  have  the  right  to  bid  on  the 
larger  government  contracts,  tenders  being  called  for  by 
public  advertisement.  In  smaller  contracts  and  pur- 
chases, however,  tenders  may  be  and  often  are  confined 
to  friends  of  the  administration.  Should  a  firm  not 
adhering  to  the  Government  side  submit  a  lower  bid  than 
anyone  else,  the  minister  may  either  decline  to  award 
any  contract  on  the  ground  that  all  the  bids  are  unsatis- 
factory or,  with  the  consent  of  the  Governor  in  Council, 
he  may  pass  over  such  bid  on  the  ground  that  it  is  ''in- 
expedient to  let  such  work  to  the  lowest  tenderer.'"^ 

The  tender  system  in  these  Conservative  days  was  a 
perfect  farce.  *  '•'  *  Conservatives  only  could  supply 
goods,  but  in  the  first  place  they  must  be  put  on  a  pre- 
ferred list  at  the  recommendation  of  a  leading  Conserva- 
tive. When  they  were  placed  on  that  list  they  were 
entitled  to  receive  tender  papers.'' 

In  many  cases  tenders  are  asked  from  friends  of  the 
Government.     There  are  cases  when  they  are  asked  for 

1  Mr.  Bergeron — Can.  Hansard,  1906-07,  p.  6104. 

2  Mr.  Foster — Can.  Hansard,  1908-09,  3266. 
^  Chapter  39,  Sec.  16,  sub.  2,  R.  S.  C. 

*  Mr.  Guthrie — Can.  Hansard,  1909-10,  p.  2458. 

208 


POLITICAL  EVILS 

from  people  on  both  sides  of  politics.  The  purchasing 
agent  tells  me  that  the  same  policy  prevails  as  has  pre- 
vailed for  many  years  past/ 

We  are  told  that  contracts  are  let  to  the  lowest  bidder. 
We  do  not  know  how  tenders  are  put  in,  and  who  opens 
them,  or  how  they  are  worked  after  they  are  opened,  but 
we  generally  find  the  contract  in  the  hands  of  a  friend, 
and  a  favorite  of  the  Government  gets  the  contract.^ 

It  has  been  pointed  out  previously  that  the  local 
patronage  committees  concern  themselves  with  the 
giving  out  of  government  contracts.  Members  of  Par- 
liament are  also  consulted  in  this  connection. 

We  know  that  the  Post  Office  department  will  not    [        > 
award  a  contract  until  they  have  consulted  either  the    '  L^ 
Conservative  member  for  the  county  or  the  defeated  can- 
didate in  the  last  election.'^ 

On  a  change  of  administration,  contracts  held  by 
adherents  of  the  form.er  Government  are  often  cancelled. 

A  return  was  laid  on  the  table  of  the  House  in  the  first 
year  after  the  Conservatives  were  in  office  showing  that 
over  500  mail  contracts  were  cancelled  during  that  first 
year.  The  return  shows  that  a  great  many  of  the  con- 
tracts which  had  not  expired  when  the  Government  took 
office  were  cancelled  when  they  came  in  and  new  con- 
tracts given  to  their  friends.* 

On  account  of  all  these  practices,  followers  of  the 
Opposition  have  often  felt  that  it  was  useless  for  them  to 
bid  on  government  contracts. 

It  has  become  the  opinion  of  traders  that  none  but 
certain  friends  can  get  the  patronage,  whatever  political 

1  Mr.  Hazen — Minister  of  Marine  and  Fisheries,  Can.  Hansard, 
1914,  p.  4U. 

2  Mr.  Sproule — Can.  Hansard,  1906-07,  p.  5726. 

3  Mr.  Kyte — Can.  Hansard,  1916,  p.  2718. 

*  Mr.  Sinclair — Can.  Hansard,  1916,  p.  2104. 

209 


THE  CANADIAN  BUDGETARY  SYSTEM 

party  is  in  power,  Liberal  or  Conservatives.     The  result 
is  very  little  competition/ 

This  absence  of  full  competition  prevents  the  heads 
of  departments  from  purchasing  to  advantage  and  often 
leads  to  excessive  prices  being  paid  for  government  sup- 
plies. 

Public  Works  Expenditures  to  Further  Party  In- 
terests. As  shown  above,  both  official  positions  and 
government  contracts  are  often  bestowed  in  Canada  with 
the  primary  object  of  advancing  the  interests  of  the 
party  in  power.  The  same  conditions  obtain  in  respect 
to  expenditures  for  public  improvements.  In  planning 
these,  partisan  considerations  have  come  to  hold  the  first 
place  rather  than  the  general  needs  of  the  country's  de- 
velopment. Government  and  opposition  parliamentary 
districts  are  treated  on  quite  uneven  terms  as  far  as  pub- 
lic works  are  concerned,  and  little  attempt  is  made  to 
dole  out  even-handed  justice  to  districts  of  a  different 
political  complexion. 

Now  that  the  honorable  gentlemen  on  the  other  side 
have  supplied  all  their  ridings  with  public  buildings,  they 
must  not  be  surprised  if  we,  on  coming  into  power,  pay 
some  attention  to  ours.  That  is  the  position  I  take  with- 
ovit  hesitation.  *  *  *  Of  course  we  must  not  squander 
public  money  on  useless  buildings — we  all  agree  to  that. 
I  do  not  object  to  being  criticized;  I  do  not  object  to  the 
brake  of  the  opposition  being  put  upon  any  minister — 
far  from  it.  But  there  is  reason  in  all  things.  The 
Liberal  party  has  been  long  in  opposition  and  ridings 
that  have  been  so  long  neglected  by  the  government  have 
rights  that  I,  for  one,  will  endeavor  not  to  forget.^ 

Last  night  I  heard  the  member  for  Guysborough  (Mr. 

1  Mr.  Guthrie — Can.  Hansard,  1909-10,  p.  2459. 

2  Hon.  Mr.  Tarte,  Minister  of  Public  Works — Can.  Hansard,  1902, 
p.  6S9- 

210 


POLITICAL  EVILS 

Sinclair)  say  that  during  fourteen  years  when  the  Con- 
servatives were  in  office  not  a  single  dollar  had  been  ex- 
pended in  the  way  of  constructing  a  public  building  in 
that  constituency.  Well,  this  is  the  fifteenth  session  I 
have  been  in  this  Parliament,  and  I  have  not  yet  had  in 
all  those  years  a  dollar  expended  within  the  confines  of 
my  (opposition)  constituency/ 

Every  new  public  work  in  this  list  is  for  a  riding 
represented  by  a  Liberal  in  this  House/ 

The  same  favoritism  towards  districts  returning  Gov- 
ernment candidates  is  still  in  vogue  today. 

Take  the  wdiole  list,  and  you  will  find  that  with  the 
exception  of  two  places  in  the  Province  of  Ontario,  these 
drill  halls  for  the  culture  of  the  youth  and  beauty — as  the 
minister  put  it — of  the  Province,  had  been  established 
where  Tory  candidates  w^re  returned  in  1911.^ 

It  is  known  to  every  person  in  the  Province  of  Nova 
Scotia  that,  during  the  last  fifteen  years,  public  works 
have  always  been  dangled  before  the  constituencies  just 
before  the  eve  of  an  election.* 

As  an  illustration  of  how  the  promise  of  government 
patronage  is  made  use  of  to  influence  voters,  the  follow- 
ing passages  may  be  cited : 

Conservatives  in  this  town  know  that  Robert  Beith 
can  get  Government  favors  for  this  town  if  any  man 
can.  We  want  a  new  post  office  and  customs  house, 
don't  we?  Other  ridings  have  received  new  public 
buildings.  We  want  our  share  of  patronage,  but  can 
only  get  it  by  sending  a  Government  supporter  to  ask 
for  it.  Return  Mr.  Beith  to  Parliament  and  Bowman- 
ville  will  get  these  necessary  public  buildings."' 

If  a  man  should  pay  fifty  cents  in  corrupting  an  elec- 
tor, he  is  unseated  and  disqualified,  but  the  Government 

1  Mr.  Roche — Can.  Hansard,  1910-11,  p.  3047. 

2  Mr.  Bennett — Can.  Hansard,  1903,  p.  13123. 

3  Mr.  Pardee — Can.  Hansard,  1914,  p.  3430. 

*  Mr.  Davidson — Can.  Hansard,  1911-12,  p.  2810. 
5  Canadian  Statesman — Jan.  8,  1902. 

211 


J 


THE  CANADIAN  BUDGETARY  SYSTEM 

can  deliberately  buy  up  an  electorate  by  means  of  pub- 
lic buildings  and  there  is  no  check  to  prevent  that/ 

Public  expenditures  should  not  be  a  consideration  at 
elections.  I  know  it  has  been  the  practice  again  and 
again  to  say:  If  you  support  the  Government  you  will 
get  a  post  office  or  such  and  such  a  public  edifice.  Well, 
we  object  to  this.  Whenever  an  election  takes  place  the 
country  has  to  judge  upon  the  policy  of  the  administra- 
tion; and  if  you  allow  the  consideration  to  go  to  the 
electors,  that  they  are  to  be  favored  with  public  edifices 
provided  they  will  return  a  supporter  of  the  Government, 
then  the  electorate  must  be  biased.  They  are  bribed  to 
a  certain  extent,  to  give  an  unfair  verdict.^ 

The  refusal  of  the  administration  to  make  impera- 
tively demanded  expenditures  on  public  works  in  oppo- 
sition districts  oftentimes  retards  the  progress  of  the 
country  and  enhances  governmental  expenditures  in  the 
long  run. 

When  the  City  of  Toronto  asked  the  Minister  of  Pub- 
lic Works  to  consider  the  case  they  were  in,  that  a  little 
expenditure  would  make  a  harbor  at  that  great  city, 
where  railroads  are  centering  and  commerce  is  in- 
creasing, a  harbor  that  would  be  a  credit  and  a  benefit  not 
to  Toronto  alone,  but  to  the  whole  country — the  Gov- 
ernment hesitates  about  spending  even  a  small  sum  there. 
Why?  The  honorable  Minister  himself  gives  the 
answer  in  the  question :  *  What  has  Toronto  done  for  me  ?' 
Unfortunately  for  the  harbor  *  *  *  the  city  does  not  re- 
turn to  this  House  one  representative  of  the  same  polit- 
ical complexion  as  the  honorable  gentlemen  on  the 
treasury  benches." 

The  late  Mackenzie  (Liberal)  Government  in  1877 
constructed  a  breakwater  in  the  district  of  UArdoise  at  a 
cost  of  $30,000.     In  the  course  of  time  repairs  were 

1  Mr.  Lister — Can.  Hansard,  1892,  p.  2757, 

2  Mr.  Laurier — Can.  Hansard,  1890,  p.  1870.  *    , 

3  Mr.  Brock — Can.  Hansard,  1902,  p.  1561. 

212 


POLITICAL  EVILS 

needed  upon  that  breakwater,  but  the  county  was  repre- 
sented by  a  Liberal  and  the  Conservative  Government 
absokitely  refused  to  spend  one  dollar  for  repairing  the 
breakwater,  much  less  to  expend  money  upon  new  pub- 
lic works.  The  consequence  was  that  in  the  course  of 
years  continual  storms  so  destroyed  the  breakwater  that, 
instead  of  its  being  a  protection  to  the  fishermen,  it  be- 
came a  menace  to  them.  It  was  not  until  the  break- 
water had  been  absolutely  destroyed  that  an  appro- 
priation was  finally  made  to  renew  it,  and  it  cost  the 
late  Liberal  Government  twice  as  much  to  rebuild  that 
breakwater  as  it  would  have  cost  if  the  late  Conserva- 
tive Government  had  spent  a  reasonable  amount  each 
year  in  maintaining  it.^ 

It  results  from  these  conditions  that  w^hile  the  Cana- 
dian federal  government  since  confederation  has  ex- 
pended large  sums  on  public  works  of  various  kinds,     j   ^ 
much  of  this  outlay  has  gone  for  work  not  really  needed. 
A  typical  instance  is  described  in  the  next  two  citations. 

The  Government  expends  $16,000  to  erect  a  post  office 
at  Laprairie.  Now,  why  is  this  done?  It  is  done  for 
the  simple  reason  that  Laprairie  was  in  the  hands  of  the 
Liberal  party  during  the  last  Parliament  and  the  Gov- 
ernment wanted  to  secure  the  return  of  a  man  from  that 
county  to  support  them  in  this  House,  and  so  they  oif ered 
this  bribe  to  the  electors  of  Laprairie.^ 

The  official  return  shows  that  the  gross  receipts  from 
mail  matter  at  Laprairie  hardly  exceeded  $1.00  a  day, 
the  gross  receipts  for  the  year  being  $433.16,  about  $1.25 
for  every  day  in  the  year.  About  thirty  or  forty  letters 
is  the  gross  amount  of  correspondence  per  day  which 
passes  through  this  office. "^ 

The  construction  of  government  docks  and  wharves 
has  furnished  another  field  for  unproductive  expenditure. 

^  Mr.  Kyte — Can.  Hansard,  1911-12,  p.  2811. 

2  Mr.  Sommerville — Can.  Hansard,  1892,  p.  2804. 

3  Mr.  Mulock — Ibid.  p.  2810. 

213 


V 


THE  CANADIAN  BUDGETARY  SYSTEM 

Here  is  a  list  of  docks  in  the  Province  of  Quebec, 
built  at  the  expense  of  hundreds  of  thousands  to  the 
people  of  Canada,  showing  receipts  from  those  docks  for 
the  last  year:  Carleton,  $28.07;  Cedars,  $17.10;  Coteau 
du  Lac,  $27.84;  Greece's  Point,  $10.24;  Isle  aux  Grues, 
$  .12;  Lacolle,  $9.76;  Perce,  v$24.7i;  St.  Irenee,  $55.69; 
St.  Thomas  de  Montmagny,  $2.62.^ 

1  myself  have  seen  a  wharf  which  cost  ten  or  twelve 
thousand  dollars  and  had  never  been  used.  But  money 
spent  in  that  way  is  badly  spent.  We  knov/  how  it  was 
done,  however.  The  member  for  the  count}^  tells  the 
Minister  that  if  he  can  get  a  wharf  or  a  bridge  con- 
structed, he  will  carry  the  parish  or  the  township.^ 

Local    Improvements    at    Federal    Expense.     At 

first  expenditures  on  public  improvements  in  the  Domin- 
ion were  confined  to  such  as  were  of  a  distinctly  federal 
character. 

In  Mackenzie's  time  and  in  our  time,  there  was  a 
pretty  well  defined  line  between  federal  and  provincial 
expenditure.  The  rule  was  that  federal  expenditures 
should  be  for  federal  purposes  and  that  Provinces 
should  be  allowed  to  care  for  matters  within  their  own 
scope.  "5^  *  "^  The  rule  was  held  to  that  wharves  and 
docks  and  breakwaters  should  be  built  on  highways  of 
travel  and  on  the  seaboard.^ 

In  the  course  of  time,  however,  the  practice  arose  for 
the  central  government  to  look  after  improvements  of 
even  the  most  inconsequential  nature. 

We  first  commenced  with  the  principle  that  Dominion 
public  works  were  to  be  confined  to  the  sea-board  and 
large  harbors.  We  never  extended  it  to  the  building 
of  little  wharfs  all  along  the  water  courses  of  this 
Dominion   and   then   the  keeping  of   them  up.  *  *  * 

^  Mr.  Bennett — Can,  Hansard,  1903,  p.  1517. 

2  Mr.  Bergeron — Can,  Hansard,  1900,  p.  loioo,       „ 

3  Mr.  Foster — Can,  Hansard,  1907-08,  p.  5194. 

214 


POLITICAL  EVILS 

Heretofore,  wharfs  on  all  these  inland  waters  have  been 
built  by  the  people  themselves,  by  the  municipalities,  by 
the  aid  of  provincial  money  in  some  cases/ 

At  first  what  the  Dominion  proposed  to  do  was  to  look 
after  the  great  public  works  of  the  country,  not  the 
small  ones.  In  the  course  of  negotiatiojns  with  the 
Government  of  Nova  Scotia,  the  Dominion  Government 
took  over  the  w^harf s  and  piers  which,  after  a  certain  ex- 
amination, were  regarded  as  being  important  ones,  and 
these  the  Dominion  Government  became  bound  to  main- 
tain." 

We  have  been  for  many  years  assisting  in  the  con- 
struction of  wharfs,  piers  and  breakwaters  on  our  coast 
line.  I  think  that  is  a  reasonable  expenditure.  We 
cannot  expect  to  satisfy  the  people  of  these  smaller 
places  by  the  statement  that  it  is  only  in  the  great  cities 
that  money  is  to  be  spent.  The  Government  must  adapt 
its  policy  to  the  public  requirements.  In  my  opinion, 
there  is  no  money  spent  more  usefully  for  the  people 
than  the  moderate  sums  spent  on  these  piers  and  break- 
waters.^ 

Whatever  is  navigable  water,  whether  tidal  or  in- 
land, is  as  fit  a  subject  for  the  erection  of  wharves  as 
are  tide  waters.  If  it  is  right  that  the  Dominion  Gov- 
ernment should  be  taxed  to  build  a  wharf  in  the  hon- 
orable gentleman's  constituency,  in  tidal  waters,  it  is 
equally  legitimate  to  construct  a  wharf  on  inland  waters 
which  are  navigable.* 

It  is  a  very  dangerous  policy  to  begin  to  build  wharves 
along  the  lakes  in  Ontario.  I  think  it  will  be  a  great 
pity  if  the  system  that  has  been  customary  so  long  in  the 
eastern  Provinces  is  to  be  imported  into  the  inland 
waters  of  Ontario.^ 

In  former  times  it  was  supposed  that  the  Provincial 

1  Mr.  Foster — Can.  Hansard,  1900,  p.  10098. 

2  Mr.  Foster — Can.  Hansard,  1905,  p.  9564. 

3  Mr.  Fielding — Can.  Hansard,  1905,  p.  9563. 

*  Mr.  Mulock,  Postmaster  General — Can.  Hansard,  1900,  p.  lOioo. 
5  Mr.  Osier — Can.  Hansard,  1905,  p.  9595- 

215 


THE  CANADIAN  BUDGETARY  SYSTEM 

Government  had  something  to  do  with  these  things,  but 
the  Provincial  Governments  are  being  reHeved  from 
them  all.  The  Provincial  Government  does  not  now,  it 
seems  to  me,  in  some  of  the  Provinces,  get  a  chance,  to 
put  a  wharf  on  a  little  river.  The  smallest  rivers  are 
invaded  and  public  money  is  spent  for  small  wharfs. 
Anything  in  the  nature  of  a  landing  place  along  the  river 
for  altogether  local  traffic  is  encompassed  as  well.  Does 
not  the  Government  see  that  by  proceeding  in  that  way 
with  an  entire  lack  of  policy  it  becomes  merely  a  matter 
of  political  patronage  ?  ^ 

If  we  are  going  to  adopt  the  principle  laid  down  that 
on  every  river,  canal,  and  water  course,  wherever  people 
want  to  get  off  and  on,  we  are  going  to  build  a  wharf, 
there  will  be  no  end  of  such  e:^penditure.^ 

Through  this  encroachment  on  the  sphere  of  the  local 
governments,  the  federal  budget  often  contains  appro- 
priations for  public  improvements  whose  total  cost  falls 
short  of  a  thousand  dollars  each.  This  employment  of 
government  funds  for  merely  local  or  private  interests 
has  been  repeatedly  criticized. 

I  can  see  some  reason  for  the  expenditure  of  public 
money  because  the  enterprise  is  too  great  for  the  local 
community  to  spend.  But,  to  spend  $700  or  $800 
upon  wharves  here,  there  and  elsewhere,  all  along  the 
sea  coast,  does  not  seem  to  me  to  be  very  good  policy.^ 

When  a  work  is  of  such  a  trifling  character  as  only 
to  amount  to  $1,000,  it  cannot  be  within  the  province 
of  this  Parliament  to  expend  the  money.  >k  *  >h  ^ 
trifling  work  like  this  is  a  matter  for  the  municipality, 
or  at  most,  for  the  Province,  if  it  is  a  public  work  at 
all.    Where  is  the  line  to  be  drawn  ?  * 

It  appears  to  me  that  the  practice  of  expending  the 
money  of  the  Dominion  of  Canada  upon  small  under- 

1  Mr.  Foster — Can.  Hansard,  1905,  p.  9555. 

2  Mr.  Foster — Can.  Hansard,  1900,  p.  10099. 

3  Mr.  Borden — Can.  Hansard,  1909-10,  p.  4230. 
*  Mr.  Lennox — Can.  Hansard,  1903,  p.  1156. 

216 


POLITICAL  EVILS 

\  takings  which  are  in  their  nature  local  is  not  a  fair 
expenditure  of  the  money  of  the  Dominion.  It  may 
be  a  perfectly  legitimate  expenditure  by  a  Province  or 
it  may  be  a  perfectly  legitimate  expenditure  by  a  local 
municipality.  But,  unless  it  serves  the  interest  of 
Canada  as  a  whole,  it  is  not  an  honest  or  judicious 
expenditure  of  the  money  of  this  country.  We  should 
not,  as  a  Federal  Parliament,  vote  the  moneys  of  the 
people  of  this  country,  for  the  promotion  of  what  is 
merely  a  local  concern.^ 

Fancy  the  Government  of  the  United  States,  who 
are  quite  as  democratic  in  their  system  as  we  are, 
undertaking  to  build  $200  or  $300  breakwaters;  up  to 
$3,000,  $4,000  and  $5,000  wharves  and  piers  on  rivers 
which  have  little  or  no  navigation  at  all.  What  do 
you  suppose  would  be  the  reception  which  would  be 
given  to  a  proposal  like  that  in  the  United  States? 
The  (U.  S.)  general  government  devotes  its  expendi- 
tures to  large  works  where  the  general  business  of  the 
country  is  involved,  and  local  matters  of  small  ac- 
count are  undertaken  by  private  persons,  by  corpora- 
tions and  municipalities,  or  by  the  local  governments.^ 

Despite  the  large  aggregate  expenditure  made  on 
them,  the  Dominion  wharves  yield  hardly  any  revenue. 

Considering  the  enormous  expenditures  on  these 
wharves,  the  sum  of  $10,000  or  $12,000  seems  to  be  a 
very  small  amount  to  be  received  from  them  in  the 
shape  of  revenue."* 

Indeed,  in  the  case  of  the  smaller  wharves,  no  attempt 
even  is  made  to  collect  wharfage  dues. 

In  the  case  of  a  large  wharf  and  large  expenditure, 
the  question  of  dues  would  be  material,  but  in  the  case 
of  small  wharves  where  it  would  cost  more  to  collect 

1  Mr.  Lennox — Can.  Hansard,  1903,  p.  1068. 

2  Mr.  Foster — Can.  Hansard,  1905,  p.  95S4. 

3  Mr.  Borden — Can.  Hansard,  1902,  p.  4673. 

217 


THE  CANADIAN  BUDGETARY  SYSTEM 

dues  than  they  would  amount  to  the  department  does 
not  take  into  consideration  the  question  of  revenue.* 

Expenditures    for    Public    Buildings    to    Further 
Party  Interests.     In  the  last  decade,  a  marked  in- 
crease has  taken  place  in  the  expenditures  of  the  Domin- 
ion Public  Works  Department.     Prior  to  1905,  these 
never  averaged  more  than  four  million  dollars  a  year. 
\     In  the  fiscal  year  19 14- 15,  the  disbursements  of  this  so- 
\    styled  "spendthrift"  department  reached  the  high  total 
/        of  $29,282,316.     Of  the  total  amount  appropriated  for 
the  purposes  of  this  department,  during  the  year  named, 
'   no  less  than  $14,891,300  was  allowed  for  the  erection  of 
new  public  buildings.     No  well  defined  system  is  fol- 
/  /    lowed  in  determining  these  appropriations. 

There  is  no  plan  upon  which  these  expenditures  are 
made.  There  is  no  setting  down  by  a  competent  au- 
thority, or  competent  board,  and  taking  into  account 
the  amount  of  money  it  would  be  wise  to  spend,  tak- 
ing into  account  the  need  of  the  services  for  which 
alone  the  money  should  be  spent,  taking  into  account 
the  localities  which  are  to  be  served  and  in  the  line  of 
precedent.  There  is  no  such  thing  as  that  at  all.  No 
country  in  the  world  proceeds  to  its  expenditure  upon 
public  works  on  the  haphazard  and  secret  plan  on 
which  this  Dominion  of  Canada  proceeds.  It  is  a 
matter  between  the  candidate,  or  the  person  pressing 
for  the  expenditure,  and  the  minister  who  has  charge 
of  the  expenditure.  The  expenditure  is  warranted  by 
the  Government  before  the  House  or  anyone  else  out- 
side of  it  has  any  knowledge  of  the  thing  at  all.^ 

The  Canadian  method  of  determining  what  expendi- 
tures shall  be  made  on  public  buildings  differs  from  the 
procedure  followed  in  the  Congress  of  the  United  States. 

1  Mr.  Hyman — Can.  Hansard,  1905,  p.  9599.  "    ^ 

2  Mr.  Foster — Can.  Hansard,  1909-10,  p.  1492. 

218 


/ 


POLITICAL  EVILS 

In  the  United  States,  where  we  think  they  have 
been  pretty  extravagant,  no  Congressman  can  get  an 
appropriation  for  pubHc  works  by  simply  going  to  a 
minister  and  buttonholing  him.  He  has  to  submit  his 
resolution  that  it  is  wise  to  have  a  public  building 
built  in  a  certain  place;  he  has  to  substantiate  that 
before  a  responsible  committee  and  that  committee 
has  the  over-sight  of  the  whole  amount  that  is  to  be 
expended  during  any  one  year.  Congressman  A  or 
Congressman  B  does  not  get  $20,000  for  a  post  office 
by  going  to  the  minister  and  persuading  him  to  put  it 
in  the  estimates;  he  has  to  go  before  the  committee 
which  has  the  examination  into  all  the  appropriations 
for  all  public  buildings,  and  which  considers  the 
reasons  for  the  expenditure  and  then  decides  what 
amount  of  money  will  be  expended  at  any  particular 
place.  Then  and  not  until  then  does  it  go  into  the 
estimates." 

In  Canada,  members  of  the  Dominion  Parliament  are 
primarily  responsible  for  most  of  the  public  buildings 
erected. 

Our  policy  regarding  public  buildings  is  one  that 
rests  very  often  upon  the  vanity  or  the  individual  am- 
bition of  the  sitting  member  to  do  as  much  as  some 
other  man  has  done.  *  *  *  i  have  looked  over  the 
list  of  public  buildings  in  the  Province  of  Quebec,  and 
I  find  that  there  are  12,  13  or  14  public  buildings  as 
regards  which  I  doubt  if  there  has  ever  been  any 
urgent  demand  upon  the  Government  for  their  con- 
struction, otherwise  than  by  the  desire  exhibited  by 
the  sitting  member  to  have  a  public  building.  I  think 
that  is  about  the  genesis  of  the  public  building.  I 
have  seen  many  of  these  buildings  in  Quebec  and  I 
suppose  they  are  the  same  all  over  Canada  and  it  bears 
the  date  of  its  erection  and  the  name  of  the  Minister 
prominently  displayed;  sometimes  it  bears  the  name 

1  Mr,  Foster — Can.  Hansard,  1909-10,  1492. 

219  ,,,,.  -i  ,,j,^i  ■■ 


THE  CANADIAN  BUDGETARY  SYSTEM 

of  the  sitting  member,  and  the  expectation  of  the  sit- 
ting member  is  that  if  he  get  a  pubHc  building  he  will 
consolidate  himself  in  the  constituency.' 

As  a  result  of  the  importunities  of  members,  uncalled 
for  and  unnecessarily  expensive  public  buildings  are 
frequently  erected. 

The  first  thing  a  member  elected  to  support  the  Gov- 
ernment thinks  of  is  getting  a  pubHc  building  or  a  wharf 
in  his  county,  no  matter  whether  that  work  is  necessary 
or  not,  and  he  will  put  it  in  a  place  where  he  got  a 
majority  or  where  he  expects  to  get  one.^ 

That  is  the  misery  of  it.  It  is  not  what  is  adequate 
to  the  needs  of  the  town,  but  it  is  that  a  member  should 
have  just  as  much  as  any  other  member.  That  is  the 
sum  and  substance  of  the  whole  thing.  It  gratifies  the 
political  pride  of  a  member  to  be  able  to  say  to  his  friends 
and  supporters:  'T  got  you  as  good  a  thing" — no,  not  as 
good  a  thing,  because  that  is  the  last  idea  which  enters 
into  his  mind,  but  ''as  costly  a  thing  as  Annapolis  got."  ' 

In  case  the  erection  of  a  public  building  is  desired, 
pressure  is  brought  to  bear  on  the  Department  of  Public 
Works,  rather  than  the  department  for  whose  use  the 
building  is  intended. 

Not  once  in  a  hundred  times  do  the  people,  when  they 
desire  a  public  building  erected  for  a  post  office,  apply 
to  the  Postmaster  General ;  they  make  their  application 
to  the  Department  of  Public  Works.'' 

This  system  of  erecting  buildings  without  consulting 
the  department  directly  involved  has  been  severely 
criticised. 

It  seems  most  extraordinary  that  the  Minister  of  Pub- 
lic Works  should  go  on  spending  money  erecting  post 

1  Mr.  Monk — Can.  Hansard,  1905,  pp.  1101-1103. 

2  Ibid. — Can.  Hansard,  1909-10,  p.  3867. 

3  Mr.  Foster — Can.  Hansard,  1899,  p.  8082. 

*  Mr.  Pugsley — Can.  Hansard,  1909-10,  p.  958.  "    . 

220 


POLITICAL  EVILS 

offices  and  customs  houses  in  different  constituencies 
without  any  report  from  the  Post  Office  or  Customs  De- 
partment that  such  buildings  are  required.  I  should 
think  that  a  new  practice  ought  to  be  adopted  and  that 
in  every  case  there  should  be  a  requisition  from  the  de- ; 
partment,  for  whose  use  the  building  is  provided  and- 
such  requisition  should  set  forth  the  necessity  of  it/ 

It  has  been  brought  to  the  attention  of  Parliament 
that  post  offices  are  built  in  this  country  without  the 
knowledge  of  the  Postmaster  General,  and  without  con- 
sideration of  the  postal  needs  of  the  districts.  The  sys- 
tem now  is  that  the  Minister  of  Public  Works  receives 
petitions  from  his  followers  and  if  he  deems  it  wise  in 
the  interests  of  the  Liberal  party  in  the  district,  he  erects 
a  post  office  without  any  regard  to  the  proportion  be- 
tween the  income  received  from  the  place  and  the  cost  of 
the  building.  I  believe  that  in  the  erection  of  post  office 
buildings  the  Post  Office  Department  should  have  a 
voice.^ 

The  Minister  of  Public  Works  buttonholed  by  some- 
body puts  in  an  appropriation  of  $20,000  or  $25,000  for 
what  he  calls  a  post  office  in  a  place  where  today  there  is 
a  postal  revenue  of  $700  annually,  and  where  the  present 
postal  accommodation  is  rented  for  exactly  $38  a  year. 
And  when  the  Minister  of  Public  Works  is  questioned  he 
admits  that  no  post  office  authority  has  told  him  that 
they  need  a  post  office  in  that  place  to  carry  on  their  busi- 
ness. Is  not  that  a  perfectly  outrageous  way  of  pro- 
ceeding? Is  there  any  other  sane  legislative  body  in 
the  world  that  would  do  that  kind  of  thing?  Who 
should  be  the  judge  of  the  necessity  for  a  post  office? 
The  post  office  authorities  themselves  and  nobody  else. 
The  Post  Office  authority  is  absent  in  Europe,  his  officers 
are  present  here,  but  neither  he  there  nor  one  of  his 
officers  here  has  ever  signed  a  scrap  of  paper  asking  for 
the  erection  of  a  post  office  in  that  town.     There  was 

1  Mr.  Crockett — Can.  Hansard,  1909-10,  p.  968. 

2  Mr.  Armstrong— Can.  Hansard,  1909-10,  p.  6683. 

221 


THE  CANADIAN  BUDGETARY  SYSTEM 

another  proposition  brought  into  the  House  by  the 
Minister  of  PubHc  Works  to  build  a  new  examining 
warehouse  in  the  City  of  Quebec.  It  was  to  cost  about 
$500,000.  The  Minister  of  Customs  came  into  the 
House  and  it  was  brought  out  in  the  course  of  question- 
ing that  the  Minister  of  Customs  had  never  asked  for  this 
building,  that  he  absolutely  knew  nothing  about  it.  *  ^=  * 
These  are  not  isolated  cases,  they  are  pattern  cases. 
Over  and  over  again  this  session  and  last  we  have  cor- 
nered the  Minister  of  Public  Works  in  his  appropriations 
for  buildings,  and  we  have  had  him  admit  time  and  time 
again  that  the  Minister  of  Customs  never  asked  for  this 
and  the  Postmaster  General  never  asked  for  that,  and  the 
departmental  administrator  knew  nothing  about  it.^ 

Formerly  public  works  were  not  undertaken  by  the 
Dominion  government  until  full  plans  of  the  size  and 
cost  of  the  improvement  had  been  prepared. 

I  have  been  in  this  House  a  good  many  years  and  have 
seen  the  Minister  of  Public  Works  in  years  gone  by 
come  here  with  plans  and  specifications  and  estimates 
when  he  wished  to  get  money  for  a  new  building.  That 
system  is  being  departed  from  and  we  are  asked  to  vote 
large  sums  of  money  on  the  mere  statement  of  the  Min- 
ister that  he  will  decide  afterwards  what  to  do  with  it." 

The  better  course  to  pursue  in  matters  of  this  kind  is 
that  which  used  to  be  followed  some  years  ago  by  the 
department.  The  Minister  should  give  the  House  the 
plans  of  the  proposed  building  and  more  accurate  esti- 
mate of  the  cost  than  my  honorable  friend,  the  Minister 
of  Public  Works  has  been  able  to  give.^ 

In  recent  years,  however,  the  practice  has  arisen  of 
requesting  parliamentary  appropriations  for  public  build- 
ing even  before  plans  for  the  same  have  been  prepared. 

In  four  or  five  cases  this  morning  votes  of  $5,000  or 

1  Mr.  Foster,  Can.  Hansard,  1909-10,  p.  1493. 

2  Mr.  Cochrane — Can.  Hansard,  1902,  p.  722. 

3  Mr.  Borden — Can.  Hansard,  1903,  p.  3045. 

Z22 


POLITICAL  EVILS 

$10,000  have  been  asked  for  public  buildings,  and  when 
we  have  asked  if  a  site  had  been  procured  or  if  plans  had 
been  prepared,  we  have  been  answered  in  the  negative. 
The  department  is  in  blissful  ignorance  as  to  what  the 
cost  will  be,  and  we  have  to  go  it  blind/ 

No  site  has  been  chosen,  no  plans  prepared,  and  no 
estimates  made  as  to  the  cost,  except  that  it  will  not 
exceed  $15,000  or  $20,000,  that  is  all  the  information 
we  can  get.' 

On  account  of  this  lack  of  precise  information,  the 

cost  of  erecting  public  buildings  is  often  far  greater  than 

originally  anticipated. 

I  have  in  my  mind  cases  in  which  some  innocent  look- 
ing estimates  have  come  down  for  a  few  thousand  dol- 
lars and  the  expenditure  terminated  in  about  ten  times 
as  much  as  it  was  expected  the  building  was  going  to 
cost." 

We  have  in  this  case  a  vote  for  $10,000.  It  goes  to 
the  public  that  this  is  all  that  will  be  voted  for  that  pur- 
pose, and  the  electors  never  dreamed  that  in  the  end  the 
cost  may  be  perhaps  $150,000.* 

The  difficulty  is  that  when  coming  before  Parliament 
and  asking  for  a  vote  the  statement  is  made  by  the 
?\linister  that  a  building  is  to  cost  only  so  much  money, 
and  then  when  complaint  was  made  that  it  is  costing 
more,  the  answer  is :  ''We  have  spent  so  much  money  and 
we  must  finish  it."  We  had  a  glaring  example  of  this  in 
the  Grande  Vallee  expenditure.  In  that  case  the  first 
amount  asked  for  was  $5,000.  It  was  supposed  by  the 
committee  that  that  was  all  that  would  be  required,  but 
the  expenditure  since  has  amounted  to  over  $60,000.^ 

Whenever  financial  conditions  have  been  favorable 
and  have  permitted  an  over-expenditure,  a  more  or  less 

1  Mr.  Clarke — Can.  Hansard,  1903,  p.  13405. 

2  Mr.  Borden — Ibid.,  p.  13028. 

3  Mr.  Cochrane — Can.  Hansard,  1903,  p.  13044. 
*  Mr.  Tisdale— Ibid.,  p.  13050. 

5  Mr.  Fowler—Can.  Hansard,  1903,  p.  5830. 

223 


THE  CANADIAN  BUDGETARY  SYSTEM 

wide  divergence  is  to  be  found  in  the  Dominion  between 
the  actual  expenditures  of  the  various  governments  and 
their  anticipated  outlays  as  submitted  to  their  respective 

'"^  Parliaments.     Whenever  so  inclined,  the  Administra- 

tion is  in  a  position  to  exceed  an  estimate  approved  by 
the  legislative  branch. 

In  this  case,  the  Minister  presiding  over  that  de- 
partment told  the  Opposition  that  this  work  would 
cost  $35,000.  The  Opposition  allowed  it  to  pass; 
$35,000  was  put  in  the  estimates.  Then,  the  following 
year,  the  Minister  comes  down  and  says:  "We  have 
exceeded  the  estimates;  instead  of  spending  $35,000, 
we  have  spent  $84,000,  or  an  increase  of  $49,000  on 
that  one  item."  ' 

It  was  not  the  custom  to  allow  a  contractor  to  com- 
mence dredging  where  there  was  only  a  vote  of  $50,- 
000,  and  go  on  and  earn  $150,000  without  the  money 
having  been  voted  by  Parliament.  *  ^  *  I  can 
understand  a  small  amount  of  over-expenditure,  but 
here  you  have  $150,000,  you  have  expended  three  dol- 
lars for  the  one  that  Parliament  has  voted. ^ 
/  As  regards  public  buildings,  the  Dominion  govern- 

V        I  ment  has  frequently  undertaken  to  erect  more  expensive 
structures  than  were  authorized  by  Parliament. 

Last  year  the  Honorable  Minister  obtained  a  sum 
to  erect  a  public  building,  which  was  to  cost  $15,000 
and  this  year  he  asks  us  to  vote  $50,000  for  that  same 
building.  If  he  had  not  spent  any  of  last  year's  vote, 
I  could  understand  his  coming  back  and  telling  us 
that  the  plans  were  changed  and  asking  for  a  larger 
vote,  but  when  he  decided  to  change  the  plans  and 
erect  a  much  more  expensive  building,  he  should  have 
waited  for  the  consent  of  this  House  to  the  change 
before  spending  the  money.^ 

1  Mr.  Bain — Can.  Hansard,  1907-08,  p.  5688. 

2  Mr.  Sproule — Can.  Hansard,  1907-08,  p.  6960. 
-  Mr.  Clancy — Can.  Hansard,  1904,  p.  533. 

224 


POLITICAL  EVILS 

If  we  are  to  keep  the  Minister  (of  Public  Works) 
and  his  department  within  bounds  in  the  expenditure 
of  public  money,  we  must  insist  that  when  the  Minis- 
ter determines  on  the  construction  of  a  public  build- 
ing in  any  town  or  village,  he  must  first  determine 
how  much  money  he  can  afford  to  spend  upon  it.  I 
can  see  no  difficulty  in  the  Minister  arriving  at  that 
conclusion.  When  he  comes  down  with  his  first  esti- 
mate, he  should  say  exactly  how  much  he  proposes  to 
expend,  and  we  should  have  an  imderstanding  that 
the  estimate  would  not  be  exceeded  by  one  dollar. 
*  *  *  As  a  representative  of  the  people  of  this  coun- 
try, I  contend  that  I  have  a  right  to  say  what  amount 
should  be  expended  on  any  public  building,  and  no 
man  who  does  not  represent  the  people  should  come 
in  and  usurp  the  function  that  belongs  to  me  in  that 
regard;  yet  that  is  what  has  been  done  for  years.  It 
has  not  been  the  members  of  this  House  who  have 
fixed  the  amount  of  the  public  expenditures;  it  has 
practically  been  the  executive  officers  of  the  Public 
Works  Department.  *  *  *  We  cannot  in  this  coun- 
try tolerate  an  executive  offfcer  who  will  day  after 
day  usurp  the  functions  of  Parliament  by  determining 
what  the  expenditure  shall  or  shall  not  be  on  any 
public  building.^ 

The  futility  of  voting  estimates,  which  the  Govern- 
ment can  disregard  at  its  pleasure,  has  been  repeatedly 
commented  upon. 

If  the  Minister  conceals  from  the  House  the  ex- 
penditures which  he  proposes  to  make,  or  goes  on  and 
makes  expenditures  to  the  tune  of  hundreds  of  thou- 
sands of  dollars  without  the  money  having  been  voted 
and  without  there  having  been  any  urgency,  it  is  mak- 
ing a  farce  of  appropriations.     Thus  the   Minister 

1  Mr,  Henderson — Can.  Hansard,  1904,  p.  636. 

225 


THE  CANADIAN  BUDGETARY  SYSTEM 

seems  to  be  becoming  an  appropriator,  to  absolve  the 
House  of  its  functions  entirely/ 

It  was  farcical  to  vote  upon  estimates  when  Parlia- 
ment had  no  guarantee  that  other  and  unauthorized 
expenditures  would  not  be  made.  Experience  had 
shown  that  year  after  year,  although  certain  estimates 
were  voted,  the  expenditures  exceeded  the  estimates, 
and  Parliament  was  never  subsequently  asked  to 
ratify  the  over-expenditures  at  the  ensuing  session, 
and  no  guarantee  was  laid  before  Parliament  that  the 
over-expenditure  was  necessary.  The  actual  result 
was  that  thousands  of  dollars  had  been  expended 
which  had  never  been  voted  or  approved  by  Parha- 
ment.^ 

The  sums  spent  on  public  buildings  in  the  Dominion 
instead  of  effecting  a  saving  very  often  increase  the  gov- 
ernment's fixed  charges  for  maintenance.  A  striking 
example  of  this  is  afforded  by  the  next  citation. 

Here  is  a  list  of  about  twenty  places  at  each  of 
which  a  public  building  has  been  erected,  and  the 
aggregate  cost  of  all  these  buildings  is  in  the  neigh- 
borhood of  $600,000  to  $650,000.  What  is  the  result? 
All  the  wants  of  the  public  service  were  formerly  met 
in  these  places  out  of  an  annual  expenditure  of  $1,578, 
whereas  now  we  have  to  pay  some  $42,000  a  year. 
Take  the  expenses  of  these  public  buildings.  Each 
one  must  have  a  caretaker  at  about  $400  per  annum ; 
fuel  $150;  light  $200;  and  interest  $1,200.  It  will  cost 
over  $2,000  yearly  to  maintain  each  of  these  build- 
ings.' 

While  large  amounts  are  unprofitably  expended  on 
public  buildings  every  year,  the  Government  has  cur- 

1  Mr.  Foster — Can.  Hansard,  1899,  p.  5422. 

2  Mr.  Cahan — Nova  Scotia,  House  of  Assembly  Debates,  1892, 
p.  237. 

3  Mr.  Bennett — Can.  Hansard,  1907-08,  p.  7184. 

226 


POLITICAL  EVILS 

tailed  its  outlays  in  other  directions  and  failed  to  grant 
the  pubHc  certain  desired  facilities. 

While  hundreds  and  thousands  of  people  living 
back  in  our  country  places  are  asking  for  weekly,  tri- 
weekly and  daily  mail  routes,  in  order  that  they  may 
have  the  visit  of  the  mail  carrier  and  communication 
with  others,  allowing  them  to  do  business,  what  is 
taking  place  under  the  management  of  this  Govern- 
ment? The  revenues  derived  from  the  postal  system 
of  the  country  are  being  spent  in  unnecessary  build- 
ings, costing  $25,000  and  more  so  that  there  is  not 
sufficient  revenue  to  aid  in  the  development  of  the 
mail  carrying  routes  in  order  that  the  people  in  the 
distant  parts  of  the  country  may  have  the  visit  of  the 
postal  carrier  more  frequently  than  they  do  today/ 

In  one  of  the  oldest  settlements  in  the  Province  of 
Ontario  about  ten  miles  from  the  City  of  Kingston, 
the  residents  have  a  mail  service  three  times  a  week 
and  for  years  they  have  been  asking  for  a  daily  mail 
service  the  extra  cost  of  which  would  amount  to  only 
$50  a  year,  and  when  I  presented  that  petition  to  the 
Postmaster  General  I  was  told  the  Government  did 
not  have  the  money  to  spend  for  that.^ 

In  1890  the  Dominion  House  of  Commons  unan- 
imously passed  the  following  resolution  which  had  been 
introduced  by  a  member  of  the  Opposition  but  was  ac- 
cepted by  Sir  John  Macdonald,  the  leader  of  the  Gov- 
ernment. 

Resolved,  that  in  the  expenditure  of  public  money, 
the  public  interest,  and  not  party  favoritism,  should 
control,  and  in  the  choice  of  places  for  the  erection  of 
public  buildings  for  post  offices,  custom  houses  and 
inland  revenue  purposes,  regard  should  be  had  to  the 

1  Mr.  Foster — Can.  Hansard,  1909-10,  p.  685. 

2  Mr.  Edwards — Can.  Hansard,  1904,  p.  698. 

227 


THE  CANADIAN  BUDGETARY  SYSTEM 

amount  of  revenue  collected,  and  to  the  public  busi- 
ness done/ 

As  a  matter  of  fact  the  principle  above  set  forth  was 

never  put  into  effect. 

Although  the  House  led  by  the  late  Premier  de- 
cided that  no  public  buildings  should  be  erected  ex- 
cept where  the  public  interests  demanded  yet  the  very 
first  session  afterwards,  public  buildings  were  erected 
where  political  interests  were  to  be  conserved/ 

More  recently  the  rule  has  come  into  vogue  that  every 
county  is  entitled  to  at  least  one  public  building  irrespec- 
tive of  the  size  of  the  localities  found  within  its  confines. 

By  a  resolution  that  was  adopted  by  this  House  in 
1 89 1,  it  was  declared  that,  in  the  selection  of  a  place 
w^here  a  pubHc  building  should  be  erected,  regard 
should  be  had  to  the  revenue  derived  from  it,  and  that 
preference  should  be  given  to  the  larger  places.  Now, 
there  are  counties  in  the  Province  of  Ontario,  which 
have  no  large  town.  *  *  ^^^  Surely  a  county  which 
has  four  or  fivt  smaller  incorporated  villages  or  towns 
is  just  as  much  entitled  to  one  or  more  public  build- 
ings as  a  county  which  has  a  large  town.^ 

The  general  policy  of  the  Government  has  not  been 
changed  in  this  respect  from  the  past.  It  seems  to 
have  been  the  will  of  the  majority  of  the  House  that 
at  least  in  the  chief  town  of  a  county  there  should  be 
a  public  building  erected.* 

Minister  of  Public  Works: — It  (post  office  build- 
ing) will  cost  $10,000.  Mr.  Clarke — Ten  thousand 
dollars.  In  a  place  with  postal  receipts  of  only  six 
hundred  dollars.  Minister  of  Public  Works — Its  be- 
ing the  only  (public)  building  in  the  county  is  the 

1  Mr.  Mills'  resolution — Can.  Hansard,  1890,  p.  1865. 

2  Mr.  Landerkin — Can.  Hansard,  1892,  p.  2752. 

3  Mr.  Henderson — Can.  Hansard,  1900,  p.  7918. 
*  Can.  Hansard,  1903,  p.  13071. 

228 


POLITICAL  EVILS 

only  defense  I  can  put  in,  aside  from  the  population 
and  the  receipts/ 

Partisan  Usages  and  Practices  in  the  Provinces. 

Although  not  appearing  in  so  acute  a  form,  the  political 
evils  already  described  as  affecting  the  workings  of  the 
Dominion  budget  system  also  occur  in  connection  with 
the  various  provincial  governments.  None  of  the  Prov- 
inces have  introduced  a  civil  service  law  as  yet  and  ap- 
pointments to  official  positions  are  still  governed  by 
political  considerations.  Provincial  patronage  lists  are 
also  not  unknown. 

We  had  in  this  Province  the  vicious  patronage  list, 
which  destroyed  good  wholesome  commercial  compe- 
tition. ^  *  *  It  led  to  a  breach  of  trust  on  the  part 
of  those  responsible  for  the  administration  of  public 
affairs.  If  the  Board  of  Directors  of  a  commercial 
institution  such  as  a  bank  were  to  make  a  preferred 
list,  take  a  certain  number  of  their  shareholders,  treat 
them  differently  from  others,  give  privileges  to  those 
who  supported  them  in  their  election  to  office,  it 
would  undoubtedly  be  regarded  as  a  breach  of  trust. ^ 

When  confederation  was  first  formed,  certain  local 
public  improvements  were  undertaken  by  the  Provinces. 
In  the  course  *of  time,  however,  the  Dominion  govern- 
ment has  taken  over  these  former  duties  of  the  Provinces 
and  now  carries  out  all  public  improvements  of  a  cer- 
tain category  no  matter  how  small  the  expenditure  in- 
volved may  be. 

There  was  a  time  when  the  public  works  line  was 
well  defined.  There  was  a  time  when  the  Fathers  of 
Confederation   and   those   who   worked   after   them 

1  Hon.  Mr.  Sutherland,  Minister  of  Public  Works — Can.  Hansard, 
1903,  p.  428. 

2  Mr.  Wilcox — Nova  Scotia,  House  of  Assembly  Debates,  1908, 
p.  588. 

229 


THE  CANADIAN  BUDGETARY  SYSTEM 

knew  what  the  line  was,  where  public  works  were 
performed  by  the  Dominion,  and  where  they  were 
held  over  for  the  Provinces.  That  line  is  absolutely 
obliterated,  and  today  this  Dominion  Government 
does  its  public  work  service  on  the  smallest  rivers  in 
any  Provinces  of  the  Dominion  and  even  goes  so  far 
as  to  build  bridges  and  the  likes  of  that/ 

As  a  result  of  this  encroachment  by  the  Dominion 
government  on  the  original  field  of  activity  of  the  Prov- 
inces, the  only  public  improvements  now  undertaken  by 
the  local  governments  are  the  construction  and  better- 
ment of  roads  and  bridges  and  the  erection  of  public 
buildings  for  provincial  purposes.  Hence  the  oppor- 
tunities for  wasteful  and  unproductive  expenditures  are 
somewhat  circumscribed.  Nevertheless,  even  if  on  a 
smaller  scale,  the  same  unwarranted  and  improvident  ex- 
penditure of  public  funds  to  further  party  interests  is 
to  be  found  as  in  the  case  of  the  Dominion.  Road  and 
bridge  moneys  are  frequently  disbursed  in  such  a  way  as 
to  aid  the  Government  side  at  election  time.  For  ex- 
ample, the  minority  report  of  the  Manitoba  Public  Ac- 
counts Committee  for  191 1  called  attention  to  the  man- 
ner in  which  public  money  was  spent  on  road  improve- 
ments on  the  eve  of  the  last  general  election.  The  in- 
tention was  manifest  to  influence  the  elections  in  the  in- 
terest of  the  Government  candidates.  Between  June 
1st  and  July  nth,  1910,  when  the  general  election  took 
place,  $150,000  of  the  provincial  funds  were  paid  out  for 
work  done  on  the  public  roads.  After  that  date,  how- 
ever, only  a  very  small  further  expenditure  was  found 
necessary  to  keep  the  roads  in  order.  Nor  is  this  by  any 
means  an  isolated  instance.     In  another  case,  when  a 

1  Mr.  Foster — Can.  Hansard,  1906-07,  p.  5319. 

230 


POLITICAL  EVILS 

general  election  occurred  in  Nova  Scotia  during  the 
early  winter,  road  work  was  started  on  a  large  scale  in 
November  although  the  ground  was  covered  with  from 
six  to  eight  inches  of  snow  at  a  time. 

In  the  Provinces  public  works  patronage  is  often  used 
as  a  means  of  providing  a  political  campaign  fund  for 
the  party  in  power.  Thus  in  Manitoba,  the  officials  of 
the  administration  preceding  the  present  one  in  office 
entered  into  supplementary  contracts  for  the  construc- 
tion of  the  new  Provincial  Parliament  building  previous 
to  a  general  election,  which  new  contracts  greatly  en- 
hanced the  profits  of  the  contractors.  In  return  the  con- 
tractors made  large  contributions  to  the  campaign  fund 
of  the  Government  party.  In  the  case  of  the  construc- 
tion of  the  Battleford  Asylum,  in  Saskatschewan,  the 
contractors  were  allowed  to  substitute  cheaper  materials 
than  specified  in  nearly  two  hundred  items  practically 
without  any  deductions  being  made  from  the  contract 
price.  On  these  minor  substitutions  the  contractors 
were  enabled  to  make  from  $50  to  $5 ,000  excess  profits. 
Most  of  the  arrangements  for  these  substitutions  were 
completed  just  before  the  provincial  election  of  1912  and 
the  supposition  is  strong  that  campaign  fund  contribu- 
tions were  exacted  in  return.  That  such  practices  at 
the  expense  of  the  taxpayers  should  be  connived  at  and 
that  a  provincial  premier  should  openly  defend  bribery 
on  the  ground  that  it  is  necessary  *'to  grease  the  palm 
of  an  Indian"  at  times,  indicates  a  low  standard  of  poli- 
tical morality  in  the  Dominion.  In  the  words  of  a 
prominent  member  of  Parliament: 

I  realize  it  to  be  too  true  that  in  Canada  the  public 
sense  respecting  Government  expenditures  is  not  so 

231 


THE  CANADIAN  BUDGETARY  SYSTEM 

delicately  and  correctly  adjusted  as  it  should  be,  and 
it  frequently  appears  but  like  the  voice  of  one  crying 
in  the  wilderness  to  protest/ 

1  Mr.  A.  K.  Maclean — Can.  Hansard,  196,  p.  352. 


232 


CHAPTER  XIII 

DIVERGENCIES    OF   THE    CANADIAN    FROM 

THE  BRITISH  BUDGETARY  SYSTEM 

AND  THEIR  RESULTS 

As  explained  at  some  length  in  the  opening  chapters, 
the  Canadian  colonies  when  first  granted  parliamentary 
institutions  followed  the  practice  which  has  prevailed  in 
the  American  states  and  which  existed  in  Great  Britain 
previous  to  1706.  That  practice  was  to  allow  each  in- 
dividual legislator  to  pull  at  the  public  purse  strings  and 
introduce  measures  calling  for  the  expenditures  of  gov- 
ernment funds.  Under  this  method,  no  systematic  plan- 
ning of  government  expenditure  was  possible  and  the 
public  moneys  were  often  unwisely  and  wastefully  spent. 
To  end  this  unsatisfactory  state  of  affairs  and  to  do  away 
with  the  legislative  scramble  for  appropriations  so 
detrimental  to  the  public  interest,  the  English  authorities 
decided  to  apply  in  Canada  the  same  corrective  which 
had  proved  so  efficacious  in  the  motherland.  This  con- 
sisted, as  we  have  seen,  in  the  introduction  of  respon- 
sible government.  The  right  to  introduce  bills  calling 
for  the  expenditure  of  public  money  was  taken  away 
from  the  individual  members  of  the  House  of  Commons 
and  that  body  was  forbidden  to  pass  any  vote  appro- 
priating any  part  of  the  public  revenue  unless  the  same 
had  been  first  recommended  by  the  responsible  ministers 
of  the  Government. 

However,  the  hopes  entertained  by  the  British  officials 
that  misapplication  of  public  funds  would  cease  and  good 
government  be  attained  in  Canada  under  their  plan  of 
responsible  government  have,  as  we  have  seen,  been 

233 


y 


THE  CANADIAN  BUDGETARY  SYSTEM 

only  partially  realized.  The  system  that  produced  such 
favorable  results  in  Great  Britain  has  failed  to  yield 
similar  fruits  when  transplanted  to  Canadian  soil.  After 
an  experience  lasting  for  practically  three-quarters  of  a 
century  with  responsible  ministerial  government,  the 
operation  of  the  Canadian  financial  system  is  still  far 
from  satisfactory. 

The  reasons  why  these  results  have  not  been  as  satis- 
factorv  in  Canada  as  in  Great  Britain  are  not  difficult  to 
determine.  They  consist  partly  in  the  failure  of  Canada 
to  adopt  certain  of  the  essential  features  of  the  British 
political  system;  partly  to  the  fact  that  in  England  cer- 
tain standards  and  fixed  customs  have  grown  up  which 
have  not  developed  in  the  Dominion;  and  partly  to  the 
circumstance  that  Canada,  as  an  undeveloped  but  rapidly 
developing  country  industrially  and  commercially,  has 
found  it  necessary  to  adopt  a  comprehensive  system  of 
public  works  constructed  and  controlled  or  subsized  by 
the  Dominion  or  provincial  governments.^ 

Although  in  our  consideration  of  the  Canadian  budge- 
tary system  it  has  been  necessary  repeatedly  to  refer  to 
these  features,  it  is  desirable,  in  this  concluding  chapter, 
again  to  make  brief  mention  of  them  in  order  that  there 
may  be  presented  in  one  place  those  characteristics  of  the 
Canadian  system  which  have  prevented  that  country 
from  securing  under  a  budgetary  system  modelled  closely 
upon  the  British  system  the  efficient  administration  of 
financial  affairs  that  obtains  in  Great  Britain.  Such  a 
statement  is  of  prime  importance  to  the  United  States  in 
the  efforts  now  being  made  to  work  out  a  proper  budge- 
tary system. 

1  Especially  have  the  enormous  aids  which  have  been  granted  to 
the  railways  exerted  an  influence  upon  Canadian  politics  and  finance 
which  has  not  been  felt  in  Great  Britain. 

234 


\ 
y 


DIVERGENCIES  AND  THEIR  RESULTS 

Executive  Control  over  Financial  Legislation.  The 

two  features  of  the  British  system  which  are  especially 
responsible  for  its  successful  operation  are:  (i)  the 
dominating  control  exercised  by  the  Executive  over  the 
Parliament  in  all  matters  of  financial  legislation;  and 
(2)  the  guiding  and  controlling  authority  exercised  by 
the  Treasury,  within  the  Administration,  in  matters  of 
finance, — this  guidance  and  control  being  exercised  not 
only  in  the  framing  of  the  Estimates  but  in  a  continuous 
day-to-day  supervision  of  expenditures.  It  has  been 
seen  that  the  British  system  of  responsible  parliamentary 
government  has  been  adopted  in  Canada,  and,  as  regards 
matters  financial,  the  British  doctrine  rigidly  applied 
that  no  supplies  to  the  Crown  may  be  voted  except  upon 
recommendation  of  the  Executive.  In  Chapter  VII  it 
was  shown  how  strictly  this  principle  is  enforced.  In 
England  this  rule  has  resulted  in  the  practically  com- 
plete elimination  from  the  Estimates,  and  therefore  from 
the  appropriation  acts  of  what  in  America  have  come  to 
be  termed  ''pork-barrel"  items.  In  Canada,  however,  I 
this  beneficial  result  has  not  followed.  This,  therefore, 
is  a  matter  which  deserves  explanation. 

As  regards  Great  Britain  it  is  first  of  all  to  be  pointed 
out  that  there  is  in  fact  much  less  opportunity  than  there 
is  in  Canada  for  the  granting  of  legislative  favors  to  in- 
dividual members  of  the  legislature.     This  is  due  to  the         y 
two  facts;  that  appointments  to  office  are  strictly  regu-    v^ 
lated  by  civil  service  laws;  and  that  the  Parliament  is 
only  seldom  called  upon  to  provide  for  public  buildings  n 
or  other  public  works  which  involve  the  expenditure  of    \  i^ 
public  money  in  the  several  parliamentary  constituencies.    I . 
And,  where  measures  are  introduced  which  are  primarily 
for  the  benefit  of  particular  localities  they  are  designated 

235 


y 


THE  CANADIAN  BUDGETARY  SYSTEM 

as  ''private  bills"  and  subjected  to  a  special  procedure 
which  is  more  efficient  than  is  the  Canadian  procedure 
in  guaranteeing  the  merit  and  public  purpose  of  the  pro- 
posed undertakings. 

In  addition  to  these  protective  influences  is  the  fact 
that  the  member  of  the  British  House  of  Commons 
occupies  a  peculiar  position  with  regard  to  the  district 
which  he  represents.  He  is  not  necessarily  a  resident 
of  his  district;  in  many  cases  he  does  not  owe  his  nomi- 
nation to  those  who  are  to  vote  for  him,  nor  does  he  need 
to  look  to  them  for  renomination. 

The  peculiar  status  which  the  member  of  the  British 
House  of  Commons  thus  occupies  is  described  and  ex- 
plained by  Lowell  in  his  "Government  of  England"  and 
this  is  not  the  place  to  dwell  more  fully  upon  it.  It  is 
sufficient  to  say  that  because  of  this  status  there  has 
been  made  possible  the  development  of  an  effective 
tradition  or  understanding  that  a  member  of  the  Com- 
mons is  elected,  not  in  order  that  he  may  represent  the 
selfish  interests  of  the  particular  locality  which  elects 
him  but  to  support  the  national  party  to  which  he  be- 
longs, and,  through  its  control,  to  advance  the  general 
interests  of  the  Kingdom  and  Empire.  So  great  is  the 
detachment  of  the  private  member  from  the  particular- 
jistic  interests  of  his  own  constituency  that  it  is  con- 
!  sidered  a  gross  impropriety  for  him  to  attempt  to  bring 
'  personal  influence  or  other  pressure  to  bear  upon  the 
'  Government  in  order  to  secure  favorable  action  upon  a 
measure  in  which  the  district  which  he  represents  is 
primarily  and  financially  interested.  It  is  of  course 
proper  for  him  to  call  attention  to  the  manner  in  which 
his  constituents  would  be  affected,   favorably  or  un- 

236 


/ 


DIVERGENCIES  AND  THEIR  RESULTS 

favorably,  by  a  proposed  public  law,  but  not  that  he 
should  seek  to  obtain  for  them  special  favors. 

When,  now,  we  turn  to  conditions  that  exist  in 
Canada,  we  find  a  far  different  state  of  affairs.  In  the 
preceding  chapter  the  extent  to  which  expenditures  or 
public  moneys  are  influenced  by  political,  partisan  or 
local  considerations  has  been  pointed  out.  It  is  recog- 
nized that  members  of  Canadian  Parliament  may  with 
propriety  importune  the  members  of  the  Cabinet  to  have 
inserted  in  the  Estimates  items  of  expenditure  which 
they  especially  desire  and  there  is  a  tolerance  of  the 
practice  upon  the  part  of  the  ministers  to  yield  to  these 
solicitations.  Here  it  is  evident  that  there  is  no  ques- 
tion of  law  or  legislative  standing  order,  but  merely  one 
of  political  morality.  Because  of  the  more  abundant 
opportunity,  the  pressure  upon  Cabinet  members  is 
greater  than  it  is  in  England,  but  the  chief  determining 
element  is  one  of  what  has  been  termed  "treasury  con-  \  ^/^ 
science."  This  conscience  is  one  which  for  its  develop- 
ment to  its  present  sensitiveness  in  England  required 
several  centuries,  and  it  is  not  a  matter  of  surprise  that 
it  should  not  operate  so  effectively  in  a  new  country  like 
Canada.  Its  growth  must  take  place,  however,  before 
this  country  can  hope  to  have  a  system  of  financial  ad-  ^^^ 
ministration  which  in  its  results  will  compare  favorably 
with  that  of  the  mother  country. 

Before  leaving  this  subject,  one  further  influencing 
fact  should  be  pointed  out.     This  is  that  the  general 
character  of  Cabinet  Government  in  Great  Britain  is  one  i 
which   intensifies   political   party   discipline   within  the  /    //^ 
House  of  Commons  and  gives  to  the  Executive  corre-  / 
sponding  dominating  control  in  all  matters  of  legisla-  ' 
tion.     These  are  features  which  sharply  distinguish  the 

^37 


J 


THE  CANADIAN  BUDGETARY  SYSTEM 

British  system  of  responsible  government  from  the 
forms,  or  at  least  from  the  modes  of  operation,  of  re- 
sponsible government  found  in  other  countries.  The 
result  is  that  members  of  the  Government  are  able  to 
assume  towards  private  members  of  the  legislature  a 
position  much  more  independent  than  they  are  able  to 
take  in  countries  where  the  legislature  has  not  been  will- 
ing to  hand  over  to  their  leaders  an  equal  degree  of  in- 
fluence and  authority.  If,  then,  in  Canada,  the  future 
shall  see  an  increasing  influence  and  control  vested  by  the 
Parliament  in  the  leaders  which  it  selects  and  maintains 
in  oflice,  it  may  be  expected  that  these  leaders  will  be  led 
to  lend  a  less  ready  ear  to  the  requests  of  private  mem- 
bers for  special  legislative  favors.  Though  perhaps  un- 
necessary, it  may  be  pointed  out  that  such  a  growth  in 
executive  control  is  desirable  only  when  accompanied  by 
a  continued  exaction  of  full  political  responsibility  upon 
the  part  of  the  ministers  for  all  policies  pursued  by  them, 
and  a  full  legal  responsibility  for  all  official  acts  com- 
mitted by  them.  It  is  the  crown  of  the  British  constitu- 
tional achievement  that  this  combination  of  executive 
power  and  responsibility  has  been  so  successfully  main- 
tained. 

Treasury  Control  over  Estimates  and  Expendi- 
tures. Equally  marked  among  the  failures  of  the 
Canadian  Government  to  realize  the  good  features  of 
the  British  budgetary  system  is  its  failure  to  provide  for 
vesting  in  its  Treasury  Department  adequate  control 
over  the  preparation  of  the  Estimates  and  the  expen- 
diture of  funds  by  the  spending  departments. 

Under  all  systems  of  government  it  is  necessary,  and 
therefore  the   practice,   that   the   estimates'  should   be 

238 


DIVERGENCIES  AND  TEIEIR  RESULTS 

founded  upon  statements  of  financial  needs  prepared  and 
submitted  by  the  heads  of  the  several  spending  services.  . 
But,  for  reasons  which  were  pointed  out  in  the  opening  \ 
chapter  of  this  report,  it  is  essential,  if  due  efficiency  and  \y' 
economy  are  to  be  secured,  that  there  should  be  some 
one  agency  which  should  have  the  authority  to  scrutinize 
objectively  these  departmental  estimates,  reduce  them 
when  thought  proper  and  bring  them  into  due  proportion 
and  relationship  to  one  another,  and,  upon  the  expendi- 
ture side,  to  exercise  a  controlling  day-to-day  super- 
vision over  all  the  expenditures  of  the  spending  depart- 
ments. And  if  this  scrutiny  and  revision  is  to  be  im- 
partially and  objectively  done,  it  is  practically  necessary, 
for  reasons  inherent  in  human  nature  itself,  that  the 
agency  through  which  it  is  done  should  itself  not  be  a 
spending  service,  except  of  course  as  regards  merely  the 
salaries  of  its  own  clerical  force. 

As  evidencing  the  enormous  value  to  Great  Britain 
of  the  work  of  its  Treasury  in  this  respect,  a  quotation 
may  be  made  from  the  report  on  the  System  of  Financial 
Administration  of  Great  Britain.  The  commission 
which  made  that  report,  say : 

Only  as  it  prosecuted  its  inquiries  into  the  details 
of  the  manner  in  which  the  Treasury  exercised  its 
powers  did  it  come  to  a  reahzation  that,  important  as 
is  this  power  of  the  Treasury  in  respect  to  estimates, 
it  constituted  but  one  feature,  one  manifestation,  as  it 
were,  of  the  far  broader  power  that  the  Treasury  has  ,y 
to  supervise  and  control,  not  only  all  matters  relating 
to  the  financial  operations  of  the  Government,  but 
practically  all  matters  of  acquiring  funds  and  prop- 
erty and  all  matters  of  incurring  obligations — which 
may  be  called  the  business  functions  as  distinguished 
from  the  public  service  activities  of  the  Government. 

239 


'J 


J 


THE  CANADIAN  BUDGETARY  SYSTEM 

More  and  more,  as  its  investigation  proceeded,  the 
commission  had  borne  in  upon  it  the  fact  that  in  the 
Treasury  the  British  Government  had  a  great  organ 
of  general  administrative  control ;  that  upon  it  fell  the 
duty  and  responsibiHty  for  the  final  determination  of 
what  form  of  organization  the  several  departments  of 
the  Government  should  have,  w^hat  personnel  v^as 
needed,  what  compensation  should  be  paid,  what  new 
undertaking  should  be  authorized,  what  changes 
should  be  made  in  the  employment  of  funds  as  pro- 
visionally allotted  by  Parliament,  what  new  grants 
Parliament  should  be  asked  to  make,  what  the  works 
program  of  the  Government  should  be,  etc. ;  that  in 
discharging  this  function  it  was  its  duty  to  keep  itself 
thoroughly  informed  regarding  the  conditions  and 
needs  of  the  several  services  and  use  its  utmost  en- 
deavor to  see  that  the  Government  operations  were 
conducted  with  the  maximum  of  efficiency  and  econ- 
omy; that,  in  a  word,  the  Treasury  was  the  one  au- 
thority to  which  Parliament  and  the  public  looked  to 
see  that  public  affairs  were  administered  in  an  eco- 
nomical and  efficient  manner. 

The  investigation  also  brought  out  another  fact 
which  the  commission  is  sure  has  never  been  ade- 
quately appreciated  by  foreign  students,  namely,  that 
these  broad  powers  of  the  Treasury,  instead  of  being 
exerted  once  a  year  when  the  estimates  are  brought 
under  consideration,  are  exerted  from  day  to  day 
throughout  the  year. 

Still  more  important,  the  fact  was  developed  that 
not  only  had  the  Treasury  this  important  duty  of  act- 
ing as  a  general  organ  of  administrative  control,  but 
this  duty  constituted  practically  its  exclusive  func- 
tion. It  is  difficult  to  overestimate  the  importance  of 
this  fact.  Until  it  is  appreciated  one  totally  miscon- 
ceives the  place  of  the  Treasury  in  the  British  admin- 
istrative system.  Misled  by  the  name,  the  commission 

240 


DIVERGENCIES  AND  THEIR  RESULTS 

began  its  inquiries  under  the  impression  that  the  Brit- 
ish Treasury  corresponded  to  the  Treasury  Depart- 
ment of  the  United  States  Government,  that  to  it  was 
entrusted,  as  its  primary  duty,  the  management  of 
the  national  finances,  the  collection,  custody,  and  dis- 
bursement of  the  public  revenues,  and  that  its  pov^ers 
in  respect  to  the  framing  of  estimates  were,  so  to  speak, 
incidental  to  this  duty. 

Nothing  is  further  from  the  fact.  It  cannot  be 
stated  too  emphatically  that  the  British  Treasury  is, 
properly  speaking,  not  a  public  service  department  at 
all.  It  has  no  public  service  duties  of  its  own.  Its 
functions  are  entirely  auxiHary  and  controlling — 
restricted  to  looking  after  the  financial  and  physical 
measures,  and  to  the  supervision  and  control  of  the 
activities  of  other  departments.  It  thus  stands  in  a 
class  by  itself  as  a  service  superior  to,  and  in  no  sense 
coordinate  with,  the  departments  which  render  ser- 
vices direct  to  the  public,  properly  speaking.  In  fact,  \ 
it  does  not  deal  with  the  public;  it  does  not  collect  the  f 
public  revenues — this  is  done  by  the  so-called  "reve- 
nue" departments;  it  does  not  have  the  custody  of  the 
public  funds — it  has  to  secure  ''credits"  before  it  has 
any  control  over  such  funds;  it  does  not  audit  public 
expenditures — that  is  done  by  the  Comptroller  and 
Auditor  General;  it  does  not  administer  the  public 
debt — that  is  performed  by  a  separate  organ,  the  Na- 
tional Debt  Commissioners.  It  is  true  that  these  sev- 
eral services  are  often  spoken  of  and  in  a  way  treated 
as  subordinate  services  of  the  Treasury,  but  their  sub- 
ordination is  practically  the  same  as  that  of  depart- 
ments which  perform  public  services.   *   *   * 

Once  we  grasp  the  fimdamental  status  of  the  Brit- 
ish Treasury  and  the  principle  upon  which  its  powers 
rest,  all  difficulty  in  the  way  of  understanding  why 
the  British  system  works  so  smoothly  disappears.^ 

^  The  Financial  Administration  of  Great  Britain,  pp.  178-191. 

241 


y 


1/ 


y 


THE  CANADIAN  BUDGETARY  SYSTEM 

As  contrasted  with  the  work  of  the  British  Treasury 
'  thus  described,  we  find  in  Canada  that  the  Minister  of 
\i  Finance  has  hardly  a  shadow  of  effective  supervising 
1  power.     The  original  estimates  are  subject  to  the  in- 
'  fluence  of  members  of  Parliament  importuning  the  min- 
;  isters  for  expenditures  which  will  be  of  special  benefit 
I  to  the  particular  localities  which  they  represent,  and  the 
appropriations,  when  made,  are  expended  by  the  sev- 
eral departments  and  bureaus  without  any  day-to-day 
supervision  and  control  from  the  Minister  of  Finance. 

As  regards,  however,  especially  the  matter  of  the 
framing  of  the  Estimates  it  will  be  proper  to  quote  with 
approval  certain  easily  practicable  improvements  which 
were  suggested  by  Sir  George  Murray  in  his  report  on 
**The  Organization  of  the  Public  Service  of  Canada.''  ^ 
All  of  these  suggestions,  it  will  be  observed,  have  as  their 
purpose  the  increasing  of  the  guiding  and  controlling  in- 
fluence of  the  Ministry  of  Finance.     Sir  George  says: 

By  the  control  of  appropriations  I  understand  the 
methods  which  Parliament  has  prescribed  for  secur- 
ing that  the  funds  which  it  grants  for  the  various 
purposes  of  Government  are  applied  to  those  purposes 
and  to  no  other.  This  seems  to  me  to  be  adequately 
provided  for  under  the  existing  law,  which  is  effect- 
ively carried  out  by  the  Auditor  General. 

The  control  of  expenditure  may  be  considered  from 
two  points  of  view;  there  is  the  control  exercised  by 
the  Government  over  its  own  Departments;  and  the 
control  exercised  by  Parliament  over  the  proposals 
of  the  Government. 

The  latter  may,  I  think,  be  regarded  as  negligible 

for  the  present  purpose.     In  theory  the  control  of 

\-  Parliament  over  expenditure  is  complete;  in  practice 

it  is  of  little  value.    This  is  partly  due  to  the  fact  that, 

1  Sessional  Paper  No.  57a,  1912,  p.  10. 

242 


DIVERGENCIES  AND  THEIR  RESULTS 

as  the  Government  must  necessarily  command  a  ma- 
jority in  the  House  of  Commons,  it  can  generally 
secure  the  passing  of  its  own  estimates;  and  partly 
because,  notwithstanding  many  professions  of  a  desire 
for  economy  in  the  abstracts,  Members  will  generally 
be  found  demanding  increased  expenditure  for  pur- 
poses in  which  their  constituencies  are  interested, 
rather  than  reductions  on  items  which  do  not  fall 
under  this  category. 

In  short,  the  control  of  public  expenditure  must 
depend  almost  entirely  on  the  Government  of  the  day;  ., 
and  here  again  we  shall  generally  find  that  individual  \ 
Ministers,  while  not  unwilling  to  acquiesce  in  the  |  ^y' 
reduction  of  the  estimates  of  other  Departments,  are  j 
prima  facie  disposed  to  recommend  increased  expend-  • 
iture  in  their  own. 

The  Minister  of  Finance,  who  is  responsible  for 
raising  the  necessary  taxation,  is,  therefore,  as  a  rule,  '  ^^ 
the  only  Minister  who  has  a  strong  inducement  to 
press  for  economy.  ^ 

The  point  of  time  at  which  he  can  use  his  influence     1 
with  the  best  effect  is  while  the  estimates  are  under 
consideration  and  before  they  have  been  presented  to  |^ 

Parliament.  Proposals  for  expenditure  which  have 
passed  this  stage  may  be  regarded  in  practice  as  un- 
likely to  be  further  amended  except  in  the  direction  of 
increase. 

The  system  under  which  the  estimates  are  at  pres- 
ent framed,  criticised,  and  presented  does  not  appear 
to  me  calculated  to  promote  economical  administra- 
tion. 

They  are  drawn  up,  in  the  first  instance,  by  indi- 
vidual Ministers  who  are  Hkely  to  be  influenced 
largely  by  their  own  prepossessions,  and  by  the  pres- 
sure put  upon  them  by  Members  of  Parliament. 

The  estimates  so  prepared  are  then  subjected  to  the 
examination  of  the  Department  of  Finance;  but  this 
examination,  owing  to  pressure  of  time,  has  ncces- 

243 


THE  CANADIAN  BUDGETARY  SYSTEM 

sarily  been  of  a  somewhat  cursory  character,  and  di- 
rected rather  to  the  totals  of  the  votes  than  to  the 
details. 

The  final  settlement  is  arrived  at  in  Council,  usually 
after  oral  discussion  between  Ministers. 

This  method  appears  to  me  to  be  at  once  wasteful 
of  the  time  of  the  Ministers  and  unlikely  to  result  in 
effective  control,  w^hich  can  only  be  secured  by  per- 
sistent criticism  of  details,  carried  on  by  means  of 
written  correspondence  in  the  first  instance  rather 
than  by  oral  discussion,  and  under  conditions  which 
permit  of  a  thorough  examination  of  the  proposals. 

I  suggest  that  the  Department  of  Finance  should  be 
definitely  charged  with  this  duty.  Every  item  of  new 
or  increased  expenditures  should  be  closel}^  scruti- 
nized; and  the  Department  proposing  it  should  be 
called  on  to  state  in  sufficient  detail  the  ground  on 
which  the  expenditure  is  required;  the  reasons  which 
prevent  its  being  deferred  to  a  later  date ;  and  the  con- 
sequential expenditure  which  will  be  rendered  neces- 
sary in  future  years  if  the  proposal  is  sanctioned. 

I  think  it  is  important  that  these  proceedings 
should  be  carried  on  in  wanting.  Oral  criticism  in 
Council  by  the  Minister  of  Finance,  and  oral  replies 
by  his  colleagues  are  necessarily  but  imperfect  meth- 
ods for  either  attacking  or  defending  proposals  made. 

Arguments  which  may  sound  plausible  in  debate 
often  lose  much  of  their  force  when  subjected  to  the 
kind  of  criticism  which  is  only  possible  in  the  light  of 
full  information  and  accurate  statement  of  fact. 
Pledges  given  in  conversation  are  apt  to  be  forgotten 
afterwards,  and  it  is  always  desirable  to  keep  on 
record  statements  of  fact  or  arguments  used  in  de- 
fense of  particular  points  of  policy. 

Correspondence  will,  of  course,  take  time ;  but  there 
must  be  great  inconvenience  in  the  present  system 
under  which  the  examination  of  all  the  estimates  must 
be  concentrated  in  the  short  period  which  elapses  be- 

244 


DIVERGENCIES  AND  THEIR  RESULTS 

tween  the  date  when  they  are  forwarded  to  the  De- 
partment of  Finance  and  the  date  at  which  they  must 
be  submitted  to  Parliament. 

Proposals  for  increased  expenditure  ^re  probably 
being  framed  in  the  Departments  throughout  the 
year;  and  it  is  not  easy  to  see  why  they  should  not  be 
submitted  for  the  approval  of  the  Finance  Depart- 
ment, as  and  when  they  are  matured.  This  would 
relieve  the  pressure  in  the  period  immediately  before 
the  estimates  are  presented  to  Parliament,  and  would 
enable  many  of  the  proposals  to  be  considered  with 
due  deliberation.  Any  sanction  given  in  the  course  of 
the  year,  would  be  provisional  and  subject  to  any  modi- 
fication which  might  hereafter  be  found  necessary  when 
the  final  estimates  for  the  ensuing  year  were  under 
consideration. 

When  the  process  of  examination  was  completed 
the  proposals  for  expenditure  would  be  reviewed  by 
the  Minister  of  Finance;  and  those  which  were  ac- 
cepted by  him  need  not  be  considered  again;  those  to 
which  he  raised  objections  not  accepted  by  his  col- 
leagues would  be  referred  to  the  Cabinet  for  discus- 
sion by  the  whole  body  of  Ministers.  The  Cabinet 
would  thus  be  relieved  of  an  immense  amount  of 
discussion  on  the  details  of  the  estimates  which  is 
necessary  under  the  present  system,  and  would  have 
to  deal  only  with  those  points  on  which  there  was  an 
irreconcilable  difference  of  opinion  between  the  Min- 
ister of  Finance  and  one  of  his  colleagues. 

Centralization  of  Responsibility  for  Expenditures. 

The  fact  that  the  several  spending  departments  are  able 
to  determine  what  the  aggregate  yearly  expenditures 
shall  be  and  to  keep  the  estimates  of  future  outlays 
within  proper  limits  has  been  deemed  one  of  the  con- 
spicuous merits  of  the  English  budget  system.  The 
British  Cabinet  is  thus  in  a  position  to  adopt  a  definite 

245 


xJ. 


J 


THE  CANADIAN  BUDGETARY  SYSTEM 

financial  policy  to  which  each  individual  minister  must 
conform.  A  uniform  course  of  action  on  the  part  of  all 
the  members  of  the  Government  is  presupposed.  In  the 
case  of  Dominion  ministers,  however,  this  desired  unity 
of  policy  as  regards  expenditures  is  frequently  not  at- 
tained. Attention  has  already  been  called  to  the  fact 
that  the  Minister  of  Public  Works  often  erects  public 
buildings  without  consulting  the  department  which  is  to 
occupy  the  edifice  and  without  ascertaining  whether  its 
erection  is  really  required  in  the  public  interest.  This 
lack  of  coordination  among  the  heads  of  the  Administra- 
tion is  manifested  in  various  ways. 

On  the  question  of  transport  you  have  the  Minister 
of  Public  Works  working,  building  harbors  and 
dredging.  You  have  the  Minister  of  Railways  and 
the  Minister  of  Marine  doing  other  portions  of  the 
work.  And  you  will  find  the  officers  of  these  minis- 
ters working  upon  the  same  area  and  with  regard  to 
the  same  object  but  in  entirely  dififerent  ways.  And 
so  you  have  confusion,  lack  of  system,  lack  of  con- 
tinuity.^ 

The  Minister  of  Finance  says  that  much  of  the  total 
sum  voted  will  not  be  expended.  My  reply  is  that  he 
has  apparently  no  control  over  the  Minister  of  PubHc 
Works  or  any  other  minister  with  respect  to  expendi- 
tures. The  Minister  of  Finance  should  inform  other 
ministers  what  he  can  permit  them  to  spend  each  year. 
The  reverse  is  the  practice.  That  is  part  of  the  duties 
of  the  Minister  of  Finance.  He  is  not  merely  a  tax 
collector.^ 

At  the  outbreak  of  the  European  war,  the  Canadian 
department  of  militia  was  granted  a  special  appropria- 
tion of  fifty  millions  of  dollars  by  the  Dominion  Parlia- 

1  Mr.  Foster — Can.  Hansard,  1910-11,  p.  6605. 

2  Mr.  A.  K.  Maclean — Can.  Hansard,  1916,  p.  939. 

246 


DIVERGENCIES  AND  THEIR  RESULTS 

ment  for  national  defense  purposes.  It  was  voted  by  the 
Cabinet  that  no  payments  were  to  be  made  out  of  this 
large  credit  until  after  the  same  had  been  approved  by 
the  Governor  General  in  Council.  These  instructions 
were  not  obeyed,  however,  and  the  militia  department 
spent  a  large  portion  of  the  appropriation  in  question 
without  obtaining  any  orders  in  council  therefor.^ 
After  a  lapse  of  two  years,  the  Minister  of  Militia  and 
Defense  responsible  for  these  expenditures  was  asked  to 
leave  the  Cabinet  on  the  ground,  among  other  things, 
that  he  had  disobeyed  the  express  injunction  about 
obtaining  orders  in  council.  On  account  of  the  interest- 
ing light  which  it  throws  on  the  manner  in  which  the 
heads  of  the  various  Canadian  government  departments 
initiate  expenditures  without  consulting  other  members 
of  the  Cabinet,  the  following  extract  from  the  corre- 
spondence between  the  Minister  of  Militia  and  the 
Canadian  Premier  preceding  the  former's  resignation  is 
worth  quoting: 

I  do  remember  your  asking  me  on  one  occasion  to 
submit  Orders  In  Council,  when  possible,  before 
incurring  large  expenditures,  but  the  reason  you 
assigned  was  not  protest  from  my  colleagues  over  my 
action,  but  that  it  was  to  set  an  example  so  as  to  assist 
to  control  others.  You  instanced  the  Post  Office  De- 
partment, the  Railway  Department,  and  the  Public 
Works  Department,  where  projects  had  been  under- 
taken without  Orders  In  Council,  and  I  remember 
distinctly  you  stated  that  some  boats  had  been  pur- 
chased and  other  large  expenditures  incurred,  without 
your  knowing  anything  about  it,  and  without  any 
Order  In  Council.'' 

1  For  details  see  Journals  Dominion  H.  of  Commons,  Vol.  LI,  Part 
2,  p.  15,  et  seq. 

2  Letter  of  Sir  Sam  Hughes  to  Sir  Robert  Borden  of  November  11, 
1916,  quoted  in  Montreal  Daily  Star  of  November  15,  1916. 

247 


THE  CANADIAN  BUDGETARY  SYSTEM 

Under  conditions  like  those  just  described,  no  sys- 
tematic restriction  or  planning  of  government  expendi- 
tures would  seem  possible.  Without  the  coordination 
of  all  departments,  no  fiscal  policy  can  be  successfully 
followed. 

The    System   of    Governor    General's    Warrants. 

There  can  be  no  question  that  the  system  of  Governor 
General's  warrants  under  which  expenditures  can  be 
made  which  have  not  been  authorized  by  Parliament  in- 
troduces a  disturbing  element  in  the  effective  working 
of  a  budgetary  system.  That  it  has  also  led  to  grave 
abuses  in  the  past  has  been  abundantly  shown.  Other 
governments  have  been  able  to  administer  their  financial 
affairs  without  this  feature  and  there  would  seem  to  be 
no  reason  why  Canada  could  not  do  the  same. 

The  abolition  of  these  special  warrants  would  bring 
it  about  that  legislative  appropriations  would  be  more 
nearly  conformed  to,  and  conditions  would  approach 
those  of  other  countries  where  responsible  parliamentary 
government  exists.  The  anomaly  could  not  then  occur 
of  a  provincial  government  like  that  of  Saskatchewan — 
after  the  local  Parliament  had  voted  five  million  dollars 
approximately  for  budgetary  purposes  in  the  fiscal  year 
1914-15, — spending  by  means  of  special  warrants  $1,- 
140,478  ^  for  items  which  had  never  appeared  in  the  esti- 
mates submitted  to  the  legislature.  Such  a  gross  vio- 
lation of  parliamentary  injunction  as  to  maximum  ex- 
penditure would  become  impossible.  That  it  is  perfectly 
feasible  to  keep  government  expenditures  within  the 
limits  fixed  by  a  budget  needs  hardly  to  be  demonstrated. 
As  an  example  of  close  conformity  to  budgetary  direc- 

1  For  details  see  Regina  Leader  of  May  15,  1915. 

248 


DIVERGENCIES  AND  THEIR  RESULTS 

tions,  the  case  of  Germany  may  be  cited.  Although  the 
German  Imperial  budget  aggregated  $750,000,000  in 
round  numbers  in  1910,  the  over-expenditure  in  the  year 
named  turned  out  to  be  only  0.31  per  cent  of  the  total 
sum  voted  in  the  budget. 

When  the  Quebec  Opposition  called  the  Administra- 
tion to  account  for  having  expended  in  the  fiscal  year 
191 1-12,  $670,002  by  means  of  special  warrants  and  thus 
having  caused  a  wide  divergence  between  the  budget 
authorized  and  the  real  provincial  expenditure,  the 
Government  stated  as  a  defence  that  it  was  impossible 
for  the  treasurer  of  a  rapidly  growing  Province  to  esti- 
mate months  in  advance  what  sums  would  have  to  be 
spent  for  the  conduct  of  public  affairs.  This  can  only 
be  termed  a  lame  excuse,  however,  for  in  England — 
where  on  account  of  the  world-wide  extent  of  the  British 
Empire  sudden  and  unforeseen  contingencies  are  far 
more  likely  to  occur — the  British  Parliament  has  not  ' 
found  it  necessary  to  entrust  the  executive  heads  of  the  \j 
government  with  the  power  of  issuing  special  warrants. 

You  may  have  in  your  mind  the  case  of  the  army 
and  navy  and  the  government  of  a  great  empire  and 
the  contingencies  unforeseen  and  unprovided  for 
nearly  every  session,  but  ParHament  has  considered 
all  that  in  the  Government  of  the  Mother  Country 
and  Parliament  there  has  declared  that  notwithstand- 
ing all  that,  there  shall  not  be  taken  one  farthing  for 
any  of  these  expenditures  if  the  Appropriation  Act 
does  not  make  provision  for  these  very  purposes.  And 
they  take  civil  contingencies  and  the  army  and  navy 
contingencies,  and  after  having  put  in  a  list  of  the 
principal  items  that  they  can  foresee,  they  put  in  a 
liberal  amount  for  unforeseen  or  unprovided  expendi- 
ture in  connection  with  these  important  services,  and 

249 


THE  CANADIAN  BUDGETARY  SYSTEM 

the  money  is  taken  from  no  other  sources  and  in  no 
other  way/ 

That  it  is  perfectly  possible  to  conduct  Canadian  pub- 
lic affairs  without  resorting  to  Governor  General's  war- 
rants is  evidenced  by  the  fact  that  the  warrants  of  this 
nature,  issued  by  the  Dominion  Government  between  the 
years  1873-78,  called  for  an  aggregate  expenditure  of 
less  than  $200,000.  The  improper  use  of  these  warrants 
would  doubtless  be  greatly  checked  if  it  were  possible  to 
require  the  Government  to  obtain  from  Parliament  the 
passage  of  a  bill  of  indemnity  covering  all  sums  expended 
without  legislative  authorization. 

It  is  not  my  intention  at  present  to  discuss  the  vari- 
ous remedies  that  might  be  adopted,  short  of  striking 
this  provision  (concerning  special  warrants)  entirely 
out  of  the  Audit  Act,  and  compelHng  the  Government, 
as  I  think  used  to  be  done  in  similar  cases,  to  apply  to 
Parliament  for  a  formal  act  of  indemnity,  when  from 
any  cause  they  are  obliged  to  spend  money  without 
the  authority  of  Parliament.^ 

Nevertheless,  so  long  as  Canadian  ministries  possess 
the  right  to  use  the  public  funds  without  a  direct  vote 
of  the  legislature,  Parliament  will  always  be  threatened 
with  a  usurpation  of  its  powers  by  the  Executive.  How 
great  this  danger  actually  is  appears  from  the  action  of 
the  new  Dominion  Administration  in  1896,  already  de- 
scribed in  a  previous  chapter.  Although  Parliament 
had  stopped  the  supplies  and  had  deliberately  refused  to 
vote  certain  salaries,  its  action  was  completely  nullified 
and  the  Government  officials  received  their  accustomed 
pay  for  two  full  months  by  the  authorities  merely  issuing 

1  Sir  Charles  Hibbert  Tupper~Can.  Hansard,  1896,  2d  session, 
p.  692. 

2  Sir  Richard  J.  Cartwright — Can.  Hansard,  1891,  p.  454i- 

250 


DIVERGENCIES  AND  THEIR  RESULTS 

special  warrants  for  the  two  million  dollars  thus  re- 
quired.    As  we  pointed  out  at  the  time : 

If  a  ministry  were  in  power  who  would  not  be  as 
honest  as  those  holding  office,  and  who  would  be  more 
venal,  and  who  had  a  sufficient  majority  to  support 
them,  whether  right  or  wrong,  they  might  ask  Parlia- 
ment to  vote  only  a  million  dollars  and  raise  the  other 
thirty-five  millions  by  Governor-Generars  warrants 
on  the  plea  of  urgent  need/ 

In  1896,  the  Dominion  Government  defended  its 
course  in  paying  these  salaries  on  the  ground  of  public 
necessity  and  because  the  interests  of  the  country  would 
have  otherwise  suffered.  British  statesmen  have  held, 
however,  that — even  if  a  deadlock  over  appropriations 
should  occur — it  is  clearly  the  duty  of  a  constitutional 
government  to  look  to  parliamentary  supplies  alone  for 
meeting  the  liabilities  of  the  government.  Thus,  Earl 
Grey,  when  Secretary  of  State,  instructed  the  Governor 
of  British  Guiana  in  a  case  where  the  legislature  had 
failed  to  pass  the  annual  supply  bill  that  "he  must  strictly 
confine  himself  to  his  legal  powers,  and  that  those  public 
services  for  which  he  was  refused  the  means  of  pro- 
viding must  be  discontinued."  In  more  detail,  Earl 
Grey  wrote : 

For  my  own  part,  I  greatly  regretted  the  certain 
increase  of  the  difficulties  of  the  colonists,  and  the 
great  danger  to  their  lives  and  property  which  might 
arise  from  their  refusing  to  the  Government  the 
means  of  meeting  the  charges  of  the  civil  establish- 
ment, including  the  police;  but  I  did  not  think  that 
those  who  were  determined  to  proceed  to  these  ex- 
tremities ought  to  be  relieved  from  the  consequences 
of  their  owm  conduct.    On  the  contrary,  I  thought  it 

1  Mr.  Sproule — Can.  Hansard,  1896,  2d  session,  p.  'jdy, 

251 


THE  CANADIAN  BUDGETARY  SYSTEM 

absolutely  necessary  that  they  should  be  made  to  feel 
that  we  (i.  e.  the  Imperial  authorities)  would  not 
flinch  from  the  course  that  we  had  deliberately 
adopted,  and  that  they  must  be  prepared  to  meet  the 
consequences  of  their  own  measures,  of  which  the 
responsibility  would  rest  solely  on  themselves. 

Upon  this  topic  of  special  warrants  it  is  pertinent  to 
quote  the  recommendation  made  by  Sir  George  Murray 
in  his  report  on  "The  Organization  of  the  Public  Service 
in  Canada."  ^ 

In  at  least  one  respect  the  existing  financial  system 
seems  to  me  unnecessarily  rigid.  Under  section  41  of 
the  Consolidated  Revenue  and  Audit  Act  the  Auditor- 
General  is  directed  to  see  that  no  payment  of  any 
public  money  is  made  for  which  there  is  no  direct 
parliamentary  appropriation,  or  which  is  in  excess  of 
any  such  appropriation. 

The  result  of  this  provision  is  that  (except  during 
the  parliamentary  recess  when  special  powers  are 
available  to  meet  urgent  and  unforeseen  expenditure) 
no  money  can  be  spent  on  any  service  not  specially 
provided  for  in  the  estimates,  nor  can  the  sum  pro- 
vided for  any  service  be  exceeded. 

But  it  must  occasionally  happen,  for  example,  that 
a  public  work  for  which  specific  provision  has  been 
made  in  the  estimates,  turns  out  in  the  course  of  the 
year  not  to  be  required,  while  some  other  work 
ejusdem  generis  proves  to  be  urgently  needed,  or  again, 
that  the  amount  provided  for  a  work  turns  out  to 
be  insufficient  to  complete  it  within  the  year,  and 
the  progress  of  the  work  has  accordingly  to  be  sus- 
pended until  further  supplies  have  been  made  avail- 
able. I  think  it  would  be  reasonable,  so  long  as  the 
total  provision  under  the  vote  was  not  exceeded,  that 
there  should  be  some  means  of  supplying  these  defi- 

1  Sessional  Paper,  No.  57a,  1912. 

252 


DIVERGENCIES  AND  THEIR  RESULTS 

ciencies ;  and  that  power  might  be  given  to  the  Min- 
ister of  Finance  on  the  application  of  a  Department  to 
authorize  expenditure  of  a  like  kind  to  that  already- 
provided  for  in  the  estimates;  or  to  authorize  expendi- 
ture on  a  specific  service  in  excess  of  the  provision 
made. 

But  in  both  cases  the  power  should  be  subject  to  the 
limitation  that  the  total  amount  provided  in  the  vote 
was  not  to  be  exceeded;  and  it  should  be  clearly 
understood  that  the  power  was  not  to  be  used  except 
in  really  urgent  cases. 

Expenditures  in  Excess  of  Appropriations.  Atten- 
tion has  also  been  called  to  the  fact  that  individual  de- 
partments of  the  Dominion  government  at  times  make 
expenditures  in  excess  of  appropriations  granted  to 
them.  It  is  explained  by  the  authorities  of  Canada  that 
this  is  rarely  deliberate  but  usually  results  from  mistakes 
made  in  charging  disbursements  against  particular  ap- 
propriation heads.  That  such  mistakes  can  be  made 
would  indicate  that  either  sufficient  care  is  not  taken  by 
accounting  officers  in  authorizing  or  making  disburse- 
ments or  that  adequate  means  does  not  exist  for  holding 
such  officers  to  a  due  accountability  for  the  manner  in 
which  they  discharge  their  duties.  All  such  excess  pay- 
ments are,  however,  reported  to  Parliament  by  the  Audi- 
tor General.  Parliament  can  thus  take  such  action  in 
respect  to  them  as  it  sees  fit.  That  the  existence  of  such 
a  system  constitutes  a  defect  in  the  Canadian  system  can 
hardly  be  doubted. 

Unexpended  Appropriations.  The  British  budget 
practice  is  to  insert  only  such  items  in  the  Estimates  as 
will  be  actually  expended  during  the  coming  fiscal  year. 
That  this  is  the  correct  procedure  has  been  aptly  pointed 
out  by  a  prominent  Canadian  member  of  Parliament. 

253 


THE  CANADIAN  BUDGETARY  SYSTEM 

If  the  budget  system  has  any  virtues,  estimates 
should  only  contain  actual  necessities  and  should 
represent  actual  intentions/ 

I  In  the  case  of  the  Dominion,  however,  the  Estimates 
\  are  full  of  items  which  the  Government  has  no  intention 
of  spending  in  the  immediate  future.  Thus,  in  the  fiscal 
year  191 2-1 9 13,  $22,519,000  was  voted  in  the  Estimates 
for  the  Public  Works  Department.  Of  this  amount 
$13,584,000  was  actually  spent  and  no  less  than  $9,- 
135,000  not  made  use  of.  This  practice  of  inserting 
items  in  the  estimates  which  cannot  possibly  be  expended 
is  an  unfortunate  departure  from  correct  methods  of 
budget  making. 

In  all  these  items  there  is  evidence  of  a  practice 
which  has  grown  up  of  voting  a  sum  of  money  year 
after  year  without  its  being  spent.  I  have  said  before, 
and  I  repeat,  that  I  do  not  think  it  is  a  proper  practice 
to  continue  voting  money  without  a  serious  intention 
of  spending  it.  If  it  is  needed  and  we  vote  it,  it  ought 
to  be  spent.  If  it  is  not  needed,  this  House  should  not 
be  called  upon  to  vote  it.^ 

The  Estimates  which  have  been  brought  down  pro- 
vide for  an  expenditure  on  consolidated  fund  account 
of  $158,958,730.58.  In  the  budget  speech  the  minister 
of  finance  stated  that  he  did  not  contemplate  expend- 
ing $158,000,000,  but  only  $125,000,000,  if  I  under- 
stood him  aright.  Therefore  to  provide  in  the  esti- 
mates for  $33,000,000  more  than  you  intend  to  expend 
is  a  very  wrong  practice.^ 

The  Estimates  are  objectionable  in  that  they  do  not 
show  sufficient  reduction.  The  Government  replied 
that  much  of  the  money  voted  is  but  re-votes  and  will 
not  be  spent.    *   *   *   The  Government  has  no  right 

1  Mr.  A.  K.  Maclean — Can.  Hansard,  1916,  p.  936. 

2  Mr.  Sproule — Can.  Hansard,  1902,  p.  1002. 

»  Hon.  Sir  Wilfrid  Laurier— Can.  Hansard,  1916,  p.  854. 

254 


DIVERGENCIES  AND  THEIR  RESULTS 

to  ask  Parliament  to  vote  money  which  they  say  they 
will  not  likely  expend.  No  other  spending  body  is 
permitted  to  do  this/ 

In  reply  to  this  protest  on  the  part  of  opposition  mem- 
bers to  the  Estimates  of  191 6,  one  of  the  Dominion  min- 
isters offered  the  following  defense  of  the  Government's 
course.  Speaking  of  the  retention  of  votes  in  the  Esti- 
mates for  new  public  buildings,  he  said : 

We  are  not  going  on  with  these  public  buildings 
while  the  war  continues,  but  we  will  retain  the  votes 
in  the  Estimates  in  the  hope  that  we  shall  be  able  to 
go  on  with  the  work  as  soon  as  the  war  is  over.  Be- 
lieving as  we  do  that  it  is  in  the  public  interest  that 
these  buildings  should  be  erected,  it  would  be  ill  ad- 
vised on  the  part  of  this  Parliament  to  drop  the  items 
from  the  Estimates.^ 

On  the  other  hand,  grave  objections  are  apparent  to 
the  policy  of  embodying  an  ambitious  financial  pro-  '^ 
gramme  in  the  Estimates  which  the  Government  has  not 
sufficient  revenues  to  carry  out.  Not  only  do  the  Esti- 
mates fail  then  to  afford  a  true  criterion  of  what  the 
Government's  actual  outlays  are  going  to  be,  but  the  in- 
clusion within  them  of  illusory  items  "prolongs  the  hope 
for  unprofitable  expenditures  in  the  minds  of  many 
people  and  localities,  and  postpones  the  day  when  we 
should  and  must  revise  our  policy  upon  public  expendi- 
tures." ' 

Distinction  between  Capital  and  Revenue  Accounts. 

In  the  public  accounts  and  yearly  financial  statements 
submitted  to  the  Dominion  and  Provincial  Parliaments, 
the  various  items  of  expenditure  are  classified,  as  we 

1  Mr.  A.  K.  Maclean — Can.  Hansard,  1916,  p.  936. 

2  Hon.  Mr.  Rogers — Can.  Hansard,  1916,  p.  2939. 

3  Mr.  A.  K.  Maclean — Can.  Hansard,  1916,  p.  936. 

255 


\l 


THE  CANADIAN  BUDGETARY  SYSTEM 

have  seen,  either  under  capital  or  under  revenue 
accounts.  No  compelHng  reason  has  been  advanced 
for  the  creation  of  such  a  distinction  in  a  government 
expenditure.  A  private  corporation  is  obHged  to  estab- 
'^  lish  a  capital  account  in  order  to  determine  its  net  profits 
and  the  amount  available  for  dividends  to  its  share- 
holders from  year  to  year.  A  state  or  municipality  is, 
however,  under  no  such  necessity.  It  might  be  deemed 
proper  for  a  commonwealth  to  charge  to  capital  account 
all  amounts  invested  in  public  undertakings  susceptible 
of  producing  a  steady  net  income  like  government  rail- 
ways  or  telephone  lines.  But  this  has  not  been  the  case 
/  I  in  Canada,  where  no  uniform  rule  has  been  followed  in 
regard  to  the  items  to  be  credited  to  capital  account. 
Originally  the  idea  appears  to  have  been  to  so  charge 
expenditures  made  upon  public  improvements  of  a  per- 
manent nature  and  which  did  not  entail  any  further  out- 
lays when  once  completed.  The  practice  now  generally 
observed  is  to  enter  under  capital  account  all  unusual 
or  one-time  expenditures,  such  as  moneys  spent  on  so- 
called  permanent  road  improvements  or  in  gifts  for 
famine  or  war  relief  purposes. 

In  the  description  of  capital  and  revenue  accounts  in 
the  earlier  portions  of  this  treatise,  the  fact  was  em- 
phasized that  this  classification  of  government  expendi- 
,  tures  afforded  an  opportunity  to  juggle  with  the  public 
\  accounts  by  shifting  items  from  one  column  to  the  other 
and  to  hide  the  true  state  of  the  public  finances.     The 
possibility  of  such  concealment  puts  a  dangerous  power 
in  the  hands  of  an  unscrupulous  administration  and  one 
not  above  misrepresenting  actual  conditions.     For  ex- 
/         ample,  a  government  can  easily  show  a  surplus  in  its 
operation  of  a  public  utility  by  irrerely  charging  to  capital 

2^6 


DIVERGENCIES  AND  THEIR  RESULTS 

account  ordinary  renewal  expenditures  which  should 
have  been  properly  entered  under  operating  expenses. 
In  order  to  guard  against  such  an  improper  showing,  it 
was  unsuccessfully  proposed  a  number  of  years  ago  that 
the  Dominion  Auditor  General  be  expressly  directed  to 
report  to  the  House  of  Commons  whenever  "a  sum 
charged  against  a  grant  for  capital  account  was  ex- 
pended, wholly  or  in  part,  for  a  purpose  properly 
chargeable  to  revenue  account." 

We  find,  in  passing  the  estimates  every  year,  that 
large  sums  are  granted  on  capital  account.  It  is  im- 
possible, when  the  estimates  are  before  the  House, 
however  anxious  gentlemen  here  may  be  to  do  their 
duty,  to  know  whether  the  whole  of  that  money  is 
properly  chargeable  to  capital  or  not.  The  Govern- 
ment obtains  a  grant  for,  say,  half  a  million  of  money 
applicable  to  a  certain  line  of  expenditure,  and  to  be 
charged  to  capital.  For  example, in  the  railway  grants 
a  sum  of  three  or  four  hundred  thousand  dollars  may 
be  applicable  to  expenditure  upon  bridges,  and  half  a 
million  in  some  years  has  been  granted  on  capital 
account  for  steel  rails.  Now,  no  one  in  this  House, 
when  the  estimates  are  passed,  can  undertake  to  say 
absolutely  how  much  of  that  should  be  capital  and 
how  much  revenue.  But  when  the  accounts  come 
before  the  Auditor-General,  after  the  expenditure  has 
taken  place,  the  Auditor-General  can  tell  that  and 
can,  by  obtaining  expert  advice,  know  very  closely 
indeed  how  much  of  that  money  should  have  been 
really  charged  to  capital  and  how  much  to  revenue. 
But  as  the  statute  has  already  been  passed  upon  the 
estimates,  making  it  all  applicable  to  capital,  he,  as 
auditor,  has  nothing  to  do  with  it;  all  he  can  say  is 
that  $500,000  has  been  expended  upon  rails  and  $350,- 
000  upon  bridges,  and  upon  the  Act  which  was  passed 
by  Parliament  he  is  directed  to  charge  all  to  capital. 

257 


THE  CANADIAN  BUDGETARY  SYSTEM 

Now,  I  say  that  the  Auditor-General,  while  carrying 
out  strictly  according  to  his  duty  what  Parliament 
has  directed  him  to  do,  that  is  to  charge  that  money 
up  to  capital,  should  be  enabled  and  required  to  report 
to  this  House  specially  that  it  has  come  to  his  knowl- 
edge in  the  investigation  of  the  accounts  that  a  por- 
tion, perhaps  all,  of  that  which  was  so  charged  to 
capital  ought  really  to  have  been  charged  to  revenue 
account.  Can  anybody  dispute  that  this  is  an  im- 
portant feature  of  auditing?  The  Auditor-General 
cannot  help  us  as  the  Audit  Act  stands.  The  esti- 
mates have  been  passed,  they  have  become  an  act  of 
Parliament.  He  is  directed  to  charge  a  certain  ex- 
penditure to  capital,  and  he  must  obey,  though  he 
finds  in  the  course  of  the  year  that  the  Government  is 
renewing  bridges  with  capital  appropriation.  If  he 
were  to  report  the  fact  to  Parliament,  we  could  see 
that  sometimes  half  a  million  of  money,  that  has  been 
charged  to  capital  and  added  to  the  debt  of  the  coun- 
try, has  enabled  the  minister  of  the  day  to  show  a 
profit  of  several  hundred  thousand  dollars  on  the 
operation  of  the  railway;  and  the  result  of  the  honor- 
able gentleman  showing  such  profit,  is  that  the  appar- 
ent profit  is  issued  to  justify  expenditure  in  other 
directions.  Why  should  we  not  know  the  truth?  .  .  . 
It  may  not  matter  to  us  whether  the  debt  is  incurred 
on  capital  account  or  whether  we  have  had  a  deficit  in 
the  earnings  of  the  railway,  it  is  all  a  debt.  But  we 
do  want  to  know  whether  the  railway  is  being  worked 
at  a  profit  or  at  a  loss,  and  it  is  a  proper  thing  for  that 
purpose  that  such  a  report  as  this  should  come  from 
the  Auditor-General  to  Parliament  when  he  finds  that 
the  estimates,  as  they  have  been  granted  by  Parlia- 
ment, are  cloaking  the  truth.^ 

As  this  proposed  change  in  the  Audit  Act  was  never 
adopted  by  the  House,  neither  the  Auditor  General  nor 

1  Mr.  Samuel  Barker — Can.  Hansard,  1904,  p.  6618. 

258 


V 


DIVERGENCIES  AND  THEIR  RESULTS 

any  other  Canadian  official  examines  into  the  question 
as  to  whether  the  amounts  charged  to  capital  accounts 
ought  really  to  have  been  so  charged.  The  Government 
is  still  able  consciously  or  unconsciously  to  manipulate 
the  public  accounts  in  this  respect. 

Another  consequence  of  dividing  government  expen- 
ditures  between  capital  and  revenue  accounts  is  that  it  l/ 
has  led  to  the  weakening  of  parliamentary  control  over 
government  outlays.  As  has  been  repeatedly  reiterated,  ^ 
the  underlying  principle  of  all  Canadian  constitutions 
is  that  the  people's  representatives  have  the  sole  right  to 
determine  the  government's  expenditures  and  that  none 
of  the  public  money  shall  be  expended  by  the  authorities 
without  the  previous  sanction  of  Parliament.  Every 
proposed  appropriation  of  public  funds  should  appear, 
therefore,  in  the  estimates  of  sums  to  be  appropriated 
for  the  various  government  services  and  be  considered 
and  passed  upon  in  the  Lower  House.  In  recent  years, 
however,  the  tendency  has  been  not  to  insert  intended 
expenditures  on  capital  account  in  the  Estimates  sub- 
mitted to  Parliament  and  to  withdraw  such  items  from 
its  direction  and  control.  This  is  more  especially  true 
of  the  Provinces. 

Consider,  for  example,  the  expenditures  of  $150,000 
charged  to  capital  account  on  bridges  and  culverts  in 
Nova  Scotia  in  the  provincial  fiscal  year  19 13- 14.  Very 
recently  the  Government  there  caused  Parliament  to 
pass  statutes  authorizing  the  expenditure  of  certain  large 
amounts  on  bridges,  road  culverts  and  on  other  public 
services,  and  the  borrowing  of  money  for  this  purpose. 
In  former  times,  the  Administration  would  have  an- 
nounced in  the  House  of  Commons  that  they  proposed 

259 


THE  CANADIAN  BUDGETARY  SYSTEM 

to    expend    out   of   borrowed   moneys   $150,000   upon 

bridges  and  culverts  and  the  information  would  have 

been  forthcoming  where  and  in  what  manner  this  sum 

was  going  to  be  spent.     But  nowadays  the  Government 

proceeds  on  the  theory  that  this  expenditure,  like  all 

I  others  sanctioned  by  the  passage  of  a  general  act  and 

I  chargeable  to  capital  account,  is  in  a  category  by  itself 

y  .  !  and  does  not  have  to  undergo  the  scrutiny  of  the  lower 

I  branch  of  the  legislature. 

Hence,  the  executive  authorities  decide  the  amount  to 
be  expended  in  any  given  year  on  the  public  services  in 
question  and  the  localities  where  it  shall  be  disbursed. 
Parliament  is  kept  in  ignorance  of  the  particular  road 
and  bridge  improvements  to  be  carried  out  and  of  their 
probable  cost.  This  diminishes  the  authority  of  the 
legislative  branch  of  the  government  and  illustrates 
anew  the  growing  power  of  the  Cabinet  in  the  conduct 
of  Canadian  affairs.  If  there  be  any  merit  in  a  legisla- 
tive safeguarding  of  the  people's  money,  this  withdrawal 
of  capital  outlays  on  public  improvements  from  Parlia- 
J  mentis  oversight  and  control  must  appear  extremely  re- 
gretable.  And  as  the  distinction  between  the  capital 
and  revenue  accounts  observed  in  Canadian  public 
finance  serves  no  good  purpose  but  possesses  a  number 
of  grave  drawbacks,  its  total  abolition  is  to  be  welcomed 
from  whatever  standpoint  viewed. 

Supplementary  Estimates.     As  has  been  pointed 

out  before,  Canadian  estimates  are  divided  into  main 

and  supplementary  estimates.     Instead  of  supplemen- 

I  tary  estimates  being  resorted  to  only   on   those   rare 

j  occasions  when  it  is  necessary  to  provide  for  some  totally 

V      '  unforeseen  expenditure,  they  are  in  practice  used  to 

260 


DIVERGENCIES  AND  THEIR  RESULTS 

cover  a  large   percentage   of   the   government's   total 
outlays. 

For  example,  the  Dominion  estimates  for  the  fiscal 
year  1913-1914  appropriated  $143,213,815  in  all.  The 
main  estimates  contained  $125,850,338  of  this  amount 
as  against  $17,361,477  in  the  supplementary  estimates. 
Hence  the  main  estimates,  which  are  first  submitted  to 
the  House  of  Commons  and  which  were  originally  in- 
tended to  indicate  with  some  degree  of  exactitude  what 
the  total  government  expenditures  during  the  coming 
fiscal  year  should  be,  have  ceased  to  be  a  safe  guide  as 
to  future  government  disbursements.  What  the  ad- 
ministration really  int-ends  to  spend  cannot  be  ascer-  j  / 
tained  now  until  after  the  various  supplementary  esti-  | 
mates  have  been  passed.  Besides  proving  an  incentive 
to  the  slip-shod  preparation  of  the  main  estimates,  the 
employment  of  supplementary  estimates  on  such  a  wide 
scale  as  is  practiced  in  Canada  tempts  the  Government 
to  withhold  from  Parliament  a  complete  statement  of 
the  country's  financial  needs  and  thus  to  show  a  sham 
economy.     This  is  particularly  true  of  election  years. 

Lump  Sum  Appropriations.  That  it  is  the  function 
of  the  appropriating  authority  to  determine  not  only  the 
sums  of  money  which  should  be  placed  at  the  disposal  of 
the  Executive,  but  also  the  purposes  or  objects  for  which 
they  may  be  spent,  is  without  question.  This  duty  is 
performed  not  only  by  insisting  that  no  public  moneys 


shall  be  expended  without  express  legislative  authoriza- 
tion, but  by  specifying,  in  the  acts  of  appropriation,  the 
specific  purposes  for  which  expenditures  may  be  made 
and  the  maximum  sums  available  for  each.  It  is  clear 
then,  that  by  this  power  of  itemization  in  the  appro- 

261 


t/ 


V 


THE  CANADIAN  BUDGETARY  SYSTEM 

priation  acts  there  is  placed  in  the  hands  of  the  legisla- 
ture a  means  whereby  a  control  over  executive  expendi- 
tures may  be  carried  to  any  conceivable  limit. 

Unfortunately,  however,  this  is  a  form  of  control 
which,  if  carried  beyond  a  certain  limit,  is  necessarily 
prejudicial  to  efficiency  in  the  administration  of  the 
government.  For,  as  does  not  need  to  be  dwelt  upon,  if 
the  hands  of  executive  agents  are  too  tightly  bound,  they 
have  not  the  means  of  adjusting  their  acts  to  administra- 
tive exigencies  as  they  arise  from  time  to  time  and  which 
\  cannot  be  foreseen  by  themselves  and  certainly  not  by  the 
members  of  the  legislature.  It  would  seem  then  that  if 
administrative  efficiency  is  to  be  harmonized  with  legis- 
lative control  of  the  purse,  a  golden  mean  must  be  secured 
as  regards  the  details  in  appropriation  acts  which  are 
made  binding  upon  the  spending  authorities. 

The  making  of  appropriations  under  general  heads 
has  undoubted  advantages.  Whenever  this  practice  is 
resorted  to  careful  provision  should  be  made  that  the 
discretion  thus  given  to  expending  authorities  is  not 
abused.  A  study  of  Canadian  practice  would  indicate 
that  such  precautions  are  not  adequately  taken. 

Is  it  business-like  to  take  a  lump  sum  of  $200,000, 
$300,000  or  $400,000,  covering  a  dozen  different 
things,  and  put  that  through  without  any  itemizing 
at  all,  a  portion  of  it  for  other  things  and  no  division 
at  all  as  to  that  amount  which  is  properly  referable  to 
salaries  or  as  to  the  amount  which  is  properly  refer- 
able to  other  operations  and  other  things?  In  my 
time,  we  had  some  lump  votes,  but  I  would  like  my 
honorable  friend  to  take  an  estimate  of  1890,  or  from 
that  up  and  compare  it  with  the  estimate  now  and  he 
will  find  that  the  tendency  has  been  to  give  lump 
votes.  *  *  *  I  do  hope,  although  it  may  be  too  much 

262 


DIVERGENCIES  AND  THEIR  RESULTS 

to  hope  for,  that  succeeding  estimates  will  show  more 
sub-divisions  so  that  we  can  define  things  a  little  more 
accurately.  The  ministers  ought  not  to  have  too 
much  power.  It  is  a  great  temptation.  If  your  back 
bencher  comes  to  you  and  wants  something  and  you 
can  show  him  you  have  a  special  vote  for  that  and 
your  vote  will  not  allow  it  you  have  an  answer,  but 
if  he  shows  you  a  vote  of  $400,000  out  of  which  you 
can  take  whatever  you  like  for  any  purpose,  you  are 
shorn  of  an  argument  that  I  am  sure  the  Minister  of 
Agriculture  must  often  wish  to  have.^ 

The   Canadian    Government   Railway   estimates    for 
1915-1916  furnish  as  good  an  illustration  as  any  of  the 
drawbacks  of  lump  sum  votes.     The  estimates  allowed  \        > 
$13,000,000   for   the   working  expenses   of  the   Inter-  \   ^ 
colonial  Railway  and  $650,000  for  the  operation  of  the  ! 
Prince  Edward  Island  Railroad  without  a  single  line  of 
explanation.     No  attempt  was  made  to  classify  this  ex- 
penditure or  to  give  Parliament  any  detailed  information 
in  regard  to  it.     The  Dominion  House  of  Commons  had    , 
no  means  of  telling  whether  the  appropriations  asked  for 
were   really   required   or   not,   but  had   to   accept   the 
assurance  of  the  Minister  of  Railways  that  the  govern- 
ment railways  could  not  be  carried  on  efficiently  unless 
the  sums  demanded  were  granted  in  full. 

In  Great  Britain  this  problem  of  harmonizing  legis- 
lative control  over  expenditures  with  administrative  dis- 
cretion is  admirably  met  through  the  grouping  of  items 
in  the  appropriation  acts  under  larger  heads  termed 
"votes,"  which  are  true  appropriations,  and  subordinate  \ 
divisions  termed  "subheads  under  which  Votes'  must  be 
accounted  for  to  Parliament,"  and  providing  that  sums 
authorized   under   one   "subhead"   may  be   shifted,   if 

1  Mr.  Foster — Can.  Hansard,  1909,  p,  969. 

263 


^y 


THE  CANADIAN  BUDGETARY  SYSTEM 

deemed  expedient,  for  expenditures  under  another  "sub- 
head." These  ''virements'  must,  however,  in  England, 
receive  the  approval  of  the  Treasury,  and  the  annual  re- 
ports of  expenditures  to  the  Parliament  must  show  them. 
It  will  be  observed  that  this  surrender  of  discretionary 
spending  powers  to  the  executive  services  is  guarded  not 
simply  by  a  rigid  accounting  under  the  heads  enumerated 
in  the  appropriation  acts,  but  by  a  continuous  controlling 
authority  exercised  by  the  Treasury  over  the  acts  of  the 
several  services.     Except  for  this  supervisory  control 
the  wisdom  of  granting  such  extensive  discretionary 
power  to  the  executive  agents  might  be  doubted.     There 
)  is  thus  furnished  an  additional  argument  in  favor  of  the 
/  establishment  in  any  state  of  such  an  organ  as  Great 
Britain  possesses  in  its  'Treasury."     For,  without  it,  it 
/    /    is. not  possible  to  harmonize  so  closely  the  conflicting  re- 
quirements of  responsible  government  and  efficient  pub- 
lic administration. 

Public  Accounts  Committee.  In  England,  the 
Public  Accounts  Committee  has  been  so  constituted  as 
to  prove  an  efficient  body  of  investigation  into  past  gov- 
ernment expenditures.  The  opponents  of  the  Admin- 
istration form  the  majority  of  the  committee  and  direct 
what  line  or  inquiry  shall  be  pursued.  At  the  committee 
hearings,  party  differences  are  laid  aside,  and  both  sides 
y  unite  in  seeking  to  ascertain  the  real  facts  concerning 
i  the  correctness  of  government  expenditures. 

It  (Public  Accounts  Committee)  is  the  only  com- 
mittee of  the  House  of  Commons  on  which  I  have 
ever  sat,  where  there  has  been  no  party  feeling.  Mem- 
bers of  both  sides  of  the  house  apparently  drop  their 

264 


DIVERGENCIES  AND  THEIR  RESULTS 

partisan  feeling  the  moment  they  enter  the  committee 
room/ 

The  knowledge  that  all  the  details  will  be  brought  to  \ 
light  in  the  Public  Accounts  Committee  acts  as  a  deter-    [     . 
rent  on  wasteful  and  extravagant,  government  expendi-    j 
tures.     In  Canada,  however,  this  deterrent  is  lacking.    ^ 
Little  risk  exists  of  any  action  of  the  Administration 
being  thoroughly  exposed  in  the  committee.     Its  time 
is  often  taken  up  in  unprofitable  wrangling  and  any  at-  ;   / 
tempted  inquiry  more  or  less  successfully  blocked  by  I 
the  machinations  of  the  friends  of  the  Government  who 
form  a  majority  of  the  committee.     Should,  neverthe- 
less, certain  damaging  evidence  be  unearthed,  a  royal 
commission  of  inquiry  is  appointed  with  limited  and 
carefully  defined  powers  of  investigation  to  supersede 
the  work  of  the  committee.     A  thorough-going  and  im- 
partial shifting  of  the  facts  in  any  case  of  improper  gov- 
ernment expenditure  rarely  takes  place  in  Canada. 

To  overcome  evils  like  those  just  described,  it  is  neces- 
sary   that   the    Canadian    public    accounts    committees 
should  be  reconstituted  on  an  entirely  different  basis,  i  i/' 
As  now  composed,  they  are  entirely  too  large  for  efficient  | 
work  in  the  case  of  both  the  Dominion  and  the  larger  ' 
Provinces.     Their  unwieldy  size  and  partisan  make-up 
gives  rise  to  much  wrangling  when  meetings  are  held 
and  much  precious  time  is  thereby  lost.     The  presence 
of  new^spaper  reporters  at  the  committee  hearings  affords 
notoriety-seeking  members  a  chance  to  advertise  them- 
selves and  delays  the  committee  from  getting  down  to 
business.     All  these  stumbling  blocks  could  be  removed 
if  the  Canadian  public  accounts  committees  were  con- 

1  Captain    Jessel — Hansard's    Parliamentary    Debates,    4th    Series, 
Volume  179. 

26^ 


THE  CANADIAN  BUDGETARY  SYSTEM 

stituted  in  accordance  with  English  precedents,  which 
allow  the  Opposition  to  name  both  the  chairman  and  a 
controlling  majority  of  such  committees  and  to  direct  its 
work  as  well. 

The  proposal  has  been  seriously  urged  in  the  past  that 
all  differences  between  the  Auditor  General  and  the 
Treasury  Board  in  regard  to  government  expenditures 
should  be  investigated  by  the  Public  Accounts  Com- 
mittee. The  reasons  for  this  innovation  has  been  stated 
as  follows: 

I  submit  that  it  would  be  better  that  these  questions 
be  discussed  in  the  Public  Accounts  Committee  rather 
than  brought  in  for  discussion  on  the  floor  of  Parlia- 
ment, which  is  the  only  other  place  we  could  discuss 
them.  But  in  Parliament  they  would  not  be  likely 
to  receive  the  same  attention  as  in  the  committee;  it 
would  not  be  possible  to  investigate  the  causes  which 
led  to  the  decision  of  the  Treasury  Board  or  the  objec- 
tion of  the  Auditor-General  with  anything  like  the 
fullness  that  it  is  desirable  these  should  be  investi- 
gated. ...  If  we  are  to  maintain  the  office  of  the 
Auditor-General  in  the  form  in  which  the  statute  de- 
clares and  designs,  I  do  not  see  how  we  can  do  it 
without  having  some  discussion,  either  in  this  com- 
mittee or  before  some  similar  body  where  there  are 
disputes  between  the  Auditor-General  and  the  Gov- 
ernment of  the  day.  The  Auditor-General  is  intended 
to  be  an  independent  officer.  Now,  if  he  has  no  kind 
of  appeal  from  any  decision  made  by  the  Treasury 
Board,  the  usefulness  and  independence  of  his  office 
will  be  in  a  great  measure  destroyed.  I  think  it  is  of 
the  essence  of  the  functions  of  the  Auditor-General 
that  when  he  raises  an  objection  of  this  kind,  the 
matter  should  be  discussed  and  a  decision  arrived  at 
which  might  govern  him  in  future,  saving  the  Gov- 
ernment and  saving  us  a  good  deal  of  trouble  in  dis- 

266 


DIVERGENCIES  AND  THEIR  RESULTS 

cussing  these  matters,  which  are  often  of  a  technical 
and  somewhat  complicated  character/ 

Perhaps  on  the  grounds  recited  below,  this  suggestion 
was  never  adopted. 

I  do  object  to  its  being  supposed  that  the  Commit- 
tee on  Public  Accounts,  by  the  reference  of  corre- 
spondence of  this  kind,  is  to  be  charged  with  the  duty 
of  trying  the  Government — and  that  is  what  it  will 
have  to  do  if  it  is  to  decide  between  the  Auditor- 
General  on  the  one  side  and  the  Treasury  Board  on 
the  other.  Let  me  call  the  honorable  gentleman's 
attention  to  this  fact  that,  time  and  again,  in  numbers 
of  cases  on  record  the  British  Government,  in  the 
British  House  of  Commons,  has  distinctly  declined  to 
submit  to  a  trial  by  a  committee  of  the  House  as  re- 
gards its  conduct  or  administration  as  an  Administra- 
tion. ...  I  do  object  to  the  committee  undertaking 
to  decide  between  the  Auditor-General  and  the  Gov- 
ernment, and  the  honorable  gentleman  will  see  the 
inconvenience  of  that  course.  In  the  first  place, 
the  Government  is  responsible  to  the  House  and  is 
charged  with  the  duty  of  giving  the  House  the  rea- 
sons and  the  justification  for  its  action  in  each  par- 
ticular case.  If  the  committee  undertake  simply  to 
hear  the  evidence  of  the  Auditor  General,  they  will 
decide  on  hearing  one  side  only,  otherwise  it  will  be 
incumbent  on  all  the  members  of  the  Government  to 
appear  before  the  committee  on  public  accounts,  as  a 
tribunal  to  decide  whether  the  Auditor  General  or  the 
Government  was  right. ^ 

General  Political  Conditions.  The  failure  of  Can- 
ada to  secure  a  satisfactory  administration  of  its  financial 
affairs  notwithstanding  the  adoption  of  a  budgetary 
system  based  on  one  which  had  given  excellent  results 

1  Sir  Richard  Cartwright — Can.  Hansard,  1894,  p.  2632. 

2  Mr.  Davies — Can.  Hansard,  1894,  P-  2629. 

267 


THE  CANADIAN  BUDGETARY  SYSTEM 

in  Great  Britain  is,  however,  not  to  be  explained  wholly 
by  the  fact  that  in  certain  respects  it  has  not  made  its 
system  conform  to  the  one  it  followed  as  a  model.  In 
no  small  degree  responsibility  for  its  failure  rests  upon 
certain  general  political  conditions  that  obtain  in  the 
Dominion.  Our  consideration  of  the  budgetary  situa- 
^  \tion  in  Canada  would  therefore  be  incomplete  without 
^some  further  reference  to  these  conditions. 

The  Spoils  System.  It  must  be  patent  to  all  that 
no  budgetary  systems  will  result  in  real  economy  and 
efficiency  in  the  administration  of  public  affairs  so  long 
j/  as  a  patronage  system,  such  as  flourishes  in  Canada, 
obtains,  and  government  expenditures  are  made  to  fur- 
ther party  interests. 

Politics  enter  every  appointment  (in  the  outside 
service),  and  politicians  on  the  spot  interest  them- 
selves not  only  in  the  appointments  but  in  subsequent 
prbmotions  of  oflicers.  .  .  .  Not  only  is  the  appoint- 
ment controlled  by  the  politician  in  the  first  instances, 
but  the  promotion,  the  status  the  man  shall  occupy 
from  time  to  time,  his  progress  is  guided  by  the  hands 
of  the  politicians.^ 

I  see  before  me  the  ex-Minister  of  Railways,  and  I 
well  remember  when  a  few  years  ago  he  practically 
defined  his  position  as  minister  by  stating  that  in  the 
appointment  of  any  man  on  the  Intercolonial  Rail- 
way, even  down  to  the  very  navvies,  he  would  take 
into  consideration  the  interests  of  his  party  and  not 
the  welfare  of  the  country.^ 

Take  the  whole  system  from  the  time  that  the 
tender  is  asked  for  until  the  work  is  completed,  and 
everywhere,  it  is  hampered,  it  is  checked,  it  is  made 
extravagant,  it  is  made  costly,  it  is  made  more  often 

1  Report  of  Commission  on  the  Civil  Service--Quoted  in  Can. 
Hansard,  1907-08,  p.  9206. 

2  Mr.  Armstrong — Can.  Hansard,  1907-08,  p.  9172. 

268 


y 


DIVERGENCIES  AND  THEIR  RESULTS 

corrupt  by  the  effect  of  the  patronage  which  meets  it 
at  every  turn  and  calls  for  its  toll  out  of  every  part  of 
the  transaction,  from  the  contractor  down  through  all 
the  multitudinous  supervisors  and  foremen  and  sup- 
ply givers.  The  patronage  system  is  there  and  it  per- 
forms its  one  function,  which  is  to  make  all  works 
more  costly,  which  is  often  to  cause  the  erection  of 
unnecessary  works  at  exaggerated  cost,  and  which 
is  always  to  vitiate  in  some  form  or  another/ 

The  introduction  of  civil  service  reform  in  the  outside 
service  and  the  elimination  of  the  patronage  system  in 
all  its  forms  would  eradicate  the  evils  just  described  and 
would  also  do  much  to  further  good  government  in  Can- 
ada. Incidentally  these  reforms  would  materially  help 
to  lighten  the  labors  of  the  Public  Accounts  Committee. 

If  we  should  take  that  step  (towards  civil  service 
reform),  the  duties  of  the  Public  Accounts  Committee 
would  be  to  a  considerable  extent  done  away  with, 
because  there  would  no  longer  be  abuses  in  the  de- 
partments of  this  Government,  the  exposures  of  which 
have  taken  up  so  much  of  the  time  of  that  committee." 

Political  Partisanship.  Important  to  be  considered 
is  the  influence  exerted  by  political  partisanship.  This 
is  an  evil  which  springs  out  of  the  general  political  stan- 
dards of  those  entrusted  with  political  authority  and  the 
tolerance  of  those  standards  by  the  people  generally,  and 
not,  primarily  at  least,  from  defects  in  the  system  of 
financial  administration  which  Canada  has  adopted. 
For  the  real  correction  of  the  evil,  one  must,  therefore, 
look  to  a  change  in  the  general  attitude  of  the  people  and  1  ^ 
of  their  representatives  with  reference  to  the  raising  and  / 
expenditure  of  public  funds. 

1  Mr.  Foster — Can.  Hansard,  1909-10,  p.  2445. 

2  Mr.  Armstrong — Can.  Hansard,  1907-08,  p.  9171. 

269 


/ 


THE  CANADIAN  BUDGETARY  SYSTEM 

The  treatment  of  public  moneys  as  trust  funds  would 
help  to  prevent  political  considerations  from  determin- 
ing to  the  same  extent  as  now  what  public  works  are  to 
be  undertaken.  It  has  been  suggested  in  Canada  that 
all  proposed  public  improvements  be  referred  to  an  im- 
partial board  or  tribunal  for  examination  and  report. 

There  ought  to  be  a  board  in  some  way  established 
before  which  all  large  claims  for  public  expenditures 
of  that  kind  should  go  for  investigation  and  impartial 
report.  Not  that  that  board  should  have  power  to 
decide;  the  duty  of  the  board  should  be  to  gather  the 
information  and  give  it  impartially  from  a  business 
standpoint  in  the  form  of  a  printed  report  and  then 
the  minister  and  the  house  could  do  what  it  pleased 
about  it/ 

But  if  an  impartial  body  like  that  just  described  is  to 
be  in  a  position  to  enforce  a  sound  policy  concerning 
public  improvements,  it  should  possess  the  right  to  de- 
termine whether  or  not  a  given  public  work  should  be 
carried  out  on  the  proposed  lines.  In  this  way,  it  would 
be  in  a  position  to  reduce  all  unwarranted  and  wasteful 
expenditures  in  the  Public  Works  Department  to  a 
minimum.  At  the  present  time,  pressure  for  improper 
\  expenditures  is  all  concentrated  on  a  single  official, 
J  namely,  the  Minister  of  Public  Works,  who  often  finds 
it  impossible  to  resist  the  appeals  made  by  party  heads 
for  such  outlays.  If  constituted  along  the  right  lines,  an 
impartial  revising  board  ought  to  prove  more  inde- 
pendent and  less  subject  to  partisan  influences  than  a 
solitary  minister.  On  account  of  its  being  an  imper- 
sonal entity  it  should  find  less  difficulty  in  rejecting  un- 
worthy projects. 

1  Mr.  Foster — Can.  Hansard,  1910-11,  p.  6604. 

270 


/ 


DIVERGENCIES  AND  THEIR  RESULTS 

Lastly,  the  institution  of  such  a  board  would  render  it 
impossible  for  members  of  the  Dominion  Parliament  as 
now  to  participate  in  the  preparation  of  the  estimates  by 
causing  the  insertion  of  items  of  expenditure  to  be  car- 
ried out  by  the  Public  Works  Department.  The  making 
of  estimates  on  the  request  of  members  of  Parliament 
would  therefore  cease.  Consequently  as  it  would  tend 
to  alleviate  and  remove  certain  of  the  existing  evils  of 
Canadian  budget  methods,  the  establishment  of  a  re- 
viewing board  for  all  public  improvements  could  only  be  f  ^ 
regarded  as  a  step  in  the  right  direction. 

No  Strong  "Opposition."  Canada,  too,  lacks  the 
check  on  government  extravagance  afforded  by  the 
presence  of  a  strong  and  numerous  opposition  party, 
which  has  contributed  so  much  to  the  success  of  par- 
liamentary government  in  the  motherland.  Parties  • 
are  far  from  being  evenly  balanced  in  the  Dominion. 
In  the  provincial  legislatures,  the  Opposition  is 
frequently  hardly  represented  at  all.  Thus  a  short  time 
ago,  the  Opposition  possessed  but  a  handful  of  members 
in  liberal  British  Columbia,  and  only  two  out  of  forty- 
eight  members  in  conservative  New  Brunswick.  In 
Quebec,  all  but  five  out  of  eighty-one  members  of  the 
House  of  Assembly  are  supporters  of  the  Government. 
In  the  case  of  the  Dominion,  the  so-called  Nationalists 
or  French-Canadian  representatives  hold  the  balance  of 
power  between  the  Liberal  and  Conservative  parties,  and 
at  the  moment  are  affiliating  with  the  latter  side.  But 
even  where  a  more  equal  division  of  representation  is  to  \ 
be  found,  no  effective  opposition  exists  in  the  English 
sense  for  both  the  great  parties  are  in  accord  in  a  policy  i  y 
of  lavish  government  expenditures,  and  must  divide  the      ' 

271 


THE  CANADIAN  BUDGETARY  SYSTEM 

responsibility  for  the  unjustifiable  disbursement  of  pub- 
lic funds. 

We  are  extravagant  in  the  disposition  of  our  na- 
tional wealth  and  income  for  purposes  that  frequently 
are  both  unnecessary  and  unproductive  and  devoid  of 
sound  business  principles.  Both  political  parties  must 
assume  responsibility  in  this  respect." 

y  Equilibrium  of  Revenues  and  Expenditures.     The 

y       \  British  practice  has  been,  generally  speaking,  to  have 
/   tax  laws  expire  with  the  end  of  the  current  fiscal  year. 
As  these  taxes  must,   therefore,   be  re-imposed   every 
1   twelve  months,  an  opportunity  is  afforded  annually  to 
^    \  maintain  an  equilibrium  between  the  revenues  and  the 
'  required  expenditures  of  the  government.     Should  the 
national  income  yield  more  than  is  required  for  this  pur- 
pose, the  next  year  will  witness  generally  a  reduction  in 
the  income  tax  or  a  lowering  of  some  other  form  of  levy. 
f  The  necessity  with  which  the  English  Government  is 
^        j    confronted  of  having  to  submit  at  each  session  of  Parlia- 
/         1   ment  a  new  scheme  of  taxation  serves  in  itself  as  a  salu- 
\  tary  check  upon  any  superfluous  or  wasteful  expenditure 
V  and  is  a  powerful  stimulus  to  economy.     In  Canada, 
however,  practically  no  attempt  is  made  to  bring  about 
an  exact  adjustment  between  revenues  and  expenditures. 
Laws  relating  to  the  collection  of  revenue  are  not  re- 
y  enacted  from  year  to  year  but,  once  introduced,  remain 
in  force  until  altered  by  further  acts  of  Parliament. 
Thus,  for  example,  if  the  Dominion  receipts  should  show 
a  large  surplus  over  expenditures  at  a  given  period,  no 
remission  of  tariff*  duties  or  change  in  any  other  form 
of  taxation  would  ensue. 

Even  when  the  government's  revenue  his.  been  far  in 

1  Mr.  A.  K.  Maclean — Can.  Hansard,  1914,  p.  2486. 

272 


i.\ 


DIVERGENCIES  AND  THEIR  RESULTS 

excess  of  requirements,  a  remission  of  taxation  has  /  ^ 
seldom  taken  place  in  Canada/  Thus,  in  the  fiscal  year  ^ 
1912-13,  the  receipts  of  the  Dominion  were  one-half  as 
large  again  as  the  total  ordinary  government  expendi- 
tures. Despite  the  resultant  surplus  of  fifty-six  millions 
of  dollars,  no  downward  revision  of  the  existing  rates  of 
taxation  occurred. 

In  place  of  reducing  taxation,  the  Canadian  policy  has  ; 
been  preferably  to  dispose  of  a  surplus  in  government  ! 
revenue  by  increasing  the  scale  of  public  expenditure. 

The  Government  is  more  interested  and  concerned 
in  devising  means  for  the  expenditure  of  the  revenue 
than  fcfi*  providing  the  requisite  revenue  for  necessary 
and  legitimate  expenditure.  I  remarked  last  year  that  \ 
it  ordinarily  was  the  function  of  a  Government  first /j    \y^ 
to  fix  its  budget  of  expenditures,  and  then  to  provide  ■( 
the  revenue  by  taxation,  but  it  is  obviously  the  prac- 
tice of  the  Government  to  obtain  all  the  revenue  pos-^ 
sible  and  then  to  provide  the  means  of  spending  it.^ 

We  are  reaching  a  peculiar  position  in  this  country 
in  respect  to  finance.  Ordinarily  we  first  estimate  our 
expenditure  and  afterwards  provide  ways  and  means 
to  meet  that  expenditure.  But  things  are  being  re- 
versed. We  estimate  our  revenue  and  then  we  pro-  ?^ 
ceed  to  find  ways  and  means  to  expend  that  revenue;  S 
in  other  words,  the  Committee  of  this  House,  which  | 
has  always  been  known  as  the  Committee  of  Ways 
and  Means  has  virtually  become  the  Committee  of 

1  The  fact  that  the  tariff  rates  are  fixed  in  many  cases  primarily 
for  purposes  of  protection  and  only  incidentally  for  purposes  of 
revenue,  should  be  taken  into  consideration.  Thus  the  retention  of  a 
large  revenue-yielding  item  might  be  justified  even  though  there  were 
no  need  for  the  receipts  obtained  from  it.  Also  to  be  taken  into  con- 
sideration is  the  fact  that  in  England  the  bulk  of  the  revenue  has 
normally  been  raised  by  direct  taxation,  the  returns  upon  which  can 
be  calculated  with  a  fair  degree  of  accuracy,  whereas  in  Canada,  the 
revenues  come  largely  from  excise  and  customs  duties  whose  yield 
cannot  be  so  closely  foretold. 

-  Mr.  A.  K.  Maclean — Can.  Hansard,  1914,  p.  2487. 


THE  CANADIAN  BUDGETARY  SYSTEM 

Supply,  and  the  Committee  of  Supply  has  become  the 
Committee  of  Ways  and  Means/ 

i  Hence,  while  in  England  the  government's  income  is 
regulated  each  year  in  accordance  with  public  require- 
ments, in  Canada,  until  the  outbreak  of  the  war,  it  was 
the  size  of  the  receipts  which  determined  how  great  the 
annual  expenditures  of  the  Dominion  and  provincial 
governments  should  be.  Ample  proof  of  this  assertion 
is  to  be  found  in  the  financial  statements  of  the  Domin- 
ion Government.  For  example,  the  ordinary  revenue 
increased  between  the  fiscal  years  191 1  and  19 14  some 
forty-six  millions  of  dollars.  During  the  same  period, 
the  ordinary  expenditures  grew  over  forty  miHions  of 
dollars.  In  1914,  $27,991,000  was  spent  on  public  works 
as  contrasted  with  $11,807,000  in  191 1 ;  $12,800,000  on 
the  Post  Office  Department  as  against  $7,954,000;  $3,- 
084,000  on  the  Land  Office  instead  of  $1,617,000,  and 
$2,683,000  in  aid  of  agriculture  in  place  of  $1,320,000. 
>Had  it  not  been  for  the  rapid  augmentation  of  the 
national  income  during  the  period  in  question,  it  is  safe 
to  say  that  the  greater  part  of  such  increased  outlays  in 
these  and  other  government  departments  would  never 

rave  been  thought  of. 
The  same  phenomenon  of  enlarged  government  re- 
ceipts entailing  increased  expenditures  is  to  be  observed 
in  the  Provinces.  Thus  the  ordinary  receipts  of  New 
Brunswick  for  the  fiscal  year  1914-1915  amounted  to 
$1,634,079  or  $68,329  more  than  had  been  originally 
estimated.  This  was  counter-balanced  by  ordinary  ex- 
penditures in  excess  of  estimates  amounting  to  $69,140. 
In  the  fiscal  year  1912-1913,  the  receipts  of  British 
Columbia  ran  $2,533,000  ahead  of  the  estimates.    This 

1  Mr,  A.  K.  Maclean — Can.  Hansard,  1912-13,  p.  10427. 

274 


DIVERGENCIES  AND  THEIR  RESULTS 

led  the  authorities  to  swell  their  anticipated  expendi- 
tures on  public  works  alone  by  $1,432,000.  Again,  Que- 
bec's ordinary  receipts  in  the  fiscal  year  1913-1914 
turned  out  to  be  $1,597,000  more  than  was  counted 
upon.  This  unexpected  windfall  was  almost  entirely 
offset  by  increased  expenditures  of  $1,577,725  beyond 
the  amount  first  proposed  in  the  budget  submitted  to  the 
Provincial  Parliament. 

Since  Canada  is  a  rapidly  growing  country  where 
government  receipts  are  almost  constantly  mounting,  re-     |    y 
trenchment  is  never  in  order  under  this  policy  of  keeping 
expenditures  up  to  the  limit  of  revenue.     In  fact,  at 
times    the    government's    receipts    have    increased    so 
rapidly  that  new  ways  of  spending  it  have  had  to  be 
devised.     Thus  in  the  case  of  the  Dominion,  the  Domin-   \ 
ion  government  at  first  built  wharves,  piers  and  break-    ; 
waters  in  the  larger  harbors  and  in  the  more  important 
places  along  the  seaboard.     As  the  national  revenues 
grew  and  more  money  became  available  for  spending 
purposes,  the  original  practice  was  extended  and  made     ^ 
to  apply  to  all  navigable  waters,  whether  they  were  tidal    ) 
estuaries,  inland  lakes,  rivers  or  canals.     So  the  Domin- 
ion government  has  come  to  embark  on  a  policy  of  petty 
improvements  and  has  built  breakwaters  costing  as  low 
as  $300  and  small  wharves,  where  the  expense  involved 
is  from  $700  up  and  where  no  attempt  even  is  made  to 
collect  wharfage  dues.     To  the  superabundant  national 
revenue  must  also  be  ascribed,  the  more  recent  policy  of 
the  Dominion  government  of  building  at  least  one  official 
structure  in  every  county  irrespective  of  the  public  needs 
or  the  size  of  the  population,  and  which  has  led  to  the 
construction  in  small  hamlets  of  post  offices,  costing  as 
high  as  $30,000. 

275 


THE  CANADIAN  BUDGETARY  SYSTEM 

Growing  Power  of  the  Cabinet.  Of  late  years  the 
growing  importance  of  the  Cabinet  and  the  diminishing 
[/  I  role  played  by  Parliament  as  an  agency  of  criticism  and 
control  has  attracted  much  attention.  The  Ministry  de- 
termines the  policy  to  be  followed  and  the  legislative 
branch  is  expected  to  approve  it  without  adequate  ex- 
amination or  opportunity  to  impose  political  respon- 
sibility. In  other  words,  parliamentary  powers  are 
being  more  and  more  assumed  by  the  Governor  in  Coun- 
cil, that  is,  by  the  Cabinet.  This  attempted  diminution 
of  Parliament's  prerogatives  has  been  in  progress  for 
many  years.  The  following  quotations  shed  light  upon 
the  manner  in  which  this  movement  is  received  in  some 
quarters. 

The  bottom  principle  in  the  Province  of  Ontario, 
in  the  old  Province  of  Upper  Canada,  was  responsible 
Government,  and  Parliament  control  over  public  ex- 
penditure. .  .  .  That  principle,  this  Government  is 
endeavoring  to  subvert  and  overthrow.  The  first  at- 
tempt in  that  direction  after  Confederation  was  made 
in  the  Province  of  Ontario  in  1870,  by  John  Sandfield 
Macdonald,  he  being  then  Prime  Minister.  He  put 
through  the  legislature  an  Act  appropriating  $1,500,- 
000  in  aid  of  railways,  and  placing  that  money  in  the 
hands  of  the  Minister  of  the  Crown  to  be  expended 
by  Order-in-Council  without  reference  to  the  legisla- 
ture.^ 

If  the  money  were  spent  in  the  ordinary  way,  we 
would  be  met  each  year  with  an  estimate  showing  for 
what  purposes  the  money  was  required;  Parliament 
could  examine  that  estimate,  and  could  refuse  it  if  it 
saw  fit.  That  is  a  safeguard.  Then  we  place  it  year 
by  year  under  the  control  of  a  responsible  minister, 
and  if  the  minister  spends  it,  he  accounts  for  it  and  he 

1  Mr.  German — Can.  Hansard,  1912-13,  p.  9144. 

276 


y 


DIVERGENCIES  AND  THEIR  RESULTS 

is  liable,  if  it  is  misspent.  If  he  does  not  spend  it,  it 
does  not  remain  in  his  hands;  it  has  to  be  revoted  the 
following  year.  That  is  a  great  safeguard.  ...  If  it 
has  been  wrongly  spent,  it  can  be  inquired  into  at  the 
Public  Accounts  Committee,  and  the  Government  is 
responsible  to  Parliament.' 

Instead  of  adhering  to  the  system  above  outlined,  a 
method  of  expenditure  by  Governor  in  Council  is  coming 
more  and  more  into  vogue  in  Canada.  This  is  especially, 
true  of  intended  expenditures  on  capital  account.  Once 
such  expenditures  are  authorized  by  the  passage  of  a 
general  act,  they  cease  to  be  inserted  in  the  estimates 
submitted  to  Parliament  and  are  withdrawn  from  its 
further  scrutiny  and  control.  A  very  good  illustration 
of  this  new  practice  occurred  in  Ontario,  in  1913,  when 
the  legislature  voted  that  an  appropriation  of  $5,000,000 
to  be  used  for  the  development  of  roads  in  northern 
Ontario  should  be  expended  by  the  Lieutenant  Governor 
of  the  Province  in  Council.  This  encroachment  by  the 
Ministry  on  the  prerogatives  of  Parliament  has  evoked 
considerable  opposition  at  times. 

I  have  watched  the  trend  of  Parliamentary  Govern- 
ment in  Canada  for  some  time,  and  it  seems  to  me  that  ; 
there  is  a  tendency  on  the  part  of  all  cabinets  to  arro-  1    / 
gate  to  themselves  supreme  power,  not  merely  with  '^ 
respect  to  the  administration  of  affairs,  but  with  re- 
spect to  legislation  in  Canada.  ...   I  protest  against 
approving,  day  after  day  and  week  after  week,  the 
idea  that  a  Cabinet  are  not  only  the  administrators  of 
afifairs  of  the  country,  but  are  practically  the  sole 
legislators  in  Canada.^ 

A  striking  example  of  the  tendency  of  the  Cabinet  to 
center  expenditures  in  its  own  hands  occurred  in  191 3, 

1  Mr.  Guthrie — Can.  Hansard,  1912-13,  p.  9319. 

2  Mr.  Emerson — Can.  Hansard,  1912-13,  p.  12018. 

277 


THE  CANADIAN  BUDGETARY  SYSTEM 

when  the  Dominion  Parliament  was  asked  to  vote  a  large 
appropriation  to  build  additional  vessels  for  the  Cana- 
dian Navy.  The  Government  proposed  that  this  ex- 
penditure should  be  made  in  the  following  way : 

The  proposal  at  this  moment  is  to  place  $35,000,- 
000,  which  is  not  to  be  expended  within  a  single  year, 
under  the  control  of  the  Government  in  reality,  nomi- 
nally under  the  control  of  the  Governor-in-Council, 
and  this  House  has  not  an  estimate,  not  a  figure  before 
it,  upon  which  it  is  asked  to  vote  the  money.  .  .  . 
The  Government  only  proposes  to  give  a  detailed 
statement  after  the  money  is  spent. ^ 

The  practice  of  the  British  Government  is  to  lay 
down  a  programme  for  the  building  of  vessels  which 
would  take  in  the  ordinary  course,  from  two  or  three 
years,  to  build,  and  the  Government  does  not  ask  the 
British  Parliament  to  vote  the  total  amount  of  the 
cost  of  these  vessels  at  once;  it  only  asks  for  the 
amount  which  it  is  expected  will  be  expended  during 
the  coming  year.  .  .  .  The  British  Parliament  is 
jealous  of  the  expenditure  of  public  moneys,  and  with 
regard  to  no  department  is  it  more  jealous  than  with 
regard  to  the  army  and  navy  estimates,  over  which  it 
retains  the  right  of  discussion  every  year,  when  a  vote 
is  asked.^ 

The  logical  sequence  of  the  Dominion  Government's 
standpoint  was  characterized  as  follows : 

If  the  argument  of  my  right  honorable  friend  means 
anything,  it  means  that  the  money  which  is  expended 
in  this  country  can  best  be  expended  under  the  au- 
thority of  the  Governor-in-Council  and  not  by  respon- 
sible ministers.  That,  Sir,  is  going  back  in  the  history 
of  Canada  for  seventy  years.  .  .  .  We  might  just  as 
well  adopt  the  next  five-years'  expenditure  for  the 

1  Mr.  Guthrie — Can.  Hansard,  1912-13,  p.  9319. 
'^  Mr.  Pugsley — Can.  Hansard,  1912-13,  p.  9325. 

278 


DIVERGENCIES  AND  THEIR  RESULTS 

Trarxscontinental  railway  or  for  the  Quebec  bridge 
and  let  the  Governor-in-Council  do  the  spending,  and 
give  Parliament  a  detailed  statement  after  the  money- 
is  spent/ 

Provincial  Subsidy  System.  Another  desirable 
change  which  would  further  operate  against  laxity  in 
state  expenditures  would  be  the  discarding  of  the  sys- 
tem of  Dominion  subsidies  to  the  various  Provinces. 
The  insertion  of  a  clause  in  the  British  North  America 
Act  requiring  the  Dominion  government  to  pay  annual 
subsidies  to  the  Provinces  embracing  confederation 
marked  a  novel  departure  from  the  established  rules 
usually  followed  in  the  drafting  of  a  constitution  for  a 
proposed  new  commonwealth.  Ordinarily,  the  accepted 
practice  has  been  to  require  the  local  governments  to 
contribute  to  the  support  of  the  central  authority,  should 
the  latter  find  itself  in  financial  difficulties,  and  to  direct 
that  any  deficit  in  the  national  finances  must  be  made 
good  by  contributions  from  the  individual  states  com- 
posing the  new  entity.  It  was  flying  in  the  face  of  all 
precedent  for  the  Canadians  to  adopt  just  the  reverse 
policy  and  to  require  that  their  Dominion  government 
should  annually  assist  in  lightening  the  financial  burdens 
of  the  different  Provinces. 

As  already  explained,  it  was  in  order  to  overcome  the 
opposition  to  confederation  that  the  sponsors  of  the 
Dominion  government  idea  felt  constrained  to  abandon 
their  original  intention  of  placing  the  entire  burden  of 
financing  local  expenditures  on  the  Provinces  and  to 
consent  to  a  system  of  subsidies  by  the  Dominion  to  the 
Provinces.  When  they  agreed  to  this  scheme,  Canadian 
statesmen  were  governed  solely  by  the  question  of  ex- 

1  Mr.  Guthrie — Can.  Hansard,  1912-13,  p.  9320. 

279  i 


/ 


y 


THE  CANADIAN  BUDGETARY  SYSTEM 

pediency.     Instead  of  preventing  any  further  spread  of 
the  subsidy  evil  beyond  the  amount  first  fixed  by 
keeping  the  door  closed   to   all   further  importuni- 
ties the  line  of  least  resistance  has  been  followed  and 
one  demand  after  another  of  the  Provinces  has  been 
acceded  to.     Roughly  speaking,  the  annual  subsidies  now 
1  paid  the  nine  Provinces  by  the  Dominion  amount  to  $i  i,- 
500,000,  which  is  nearly  one-third  of  their  ordinary 
i  yearly  revenue.     As  already  mentioned,  the  proportion 
;  varies  from  one-tenth  in  British  Columbia  to  four-fifths 
of  the  total  government  income  in  Prince  Edward  Island. 
From  the  beginning  of  confederation  and  up  to  the  close 
of  the  fiscal  year  19 16,  the  provincial  subsidies  have 
amounted  to  over  $260,000,000. 

The  bestowal  by  the  Dominion  of  such  large  sums  on 
the  local  governments  is  objectionable  from  the  stand- 
point of  correct  budget  procedure  for  several  reasons. 
/  In  the  first  place,  the  Dominion  subsidies  violate  the 
k  sound  constitutional  and  economic  principle  that  the  best 
way  to  check  extravagance  in  public  and  private  expen- 
ditures is  to  oblige  those  political  units  which  spend 
funds  of  any  description  to  furnish  the  proceeds  with 
which  to  defray  such  outlays.  Economy  cannot  be 
secured  so  long  as  those  who  spend  money  are  not  under 
^  the  necessity  of  providing  it.  A  good  illustration  of  this 
is  afiForded  by  the  Canadian  practice  of  having  the 
Provinces  determine  the  number  of  judges  in  the  higher 
courts  whose  salaries  must  then  be  paid  out  of  the 
Dominion  treasury. 

When  you  find  one  body  creating  judgeships, 
whose  occupants  are  to  be  paid,  not  by  their  creators, 
but  by  another  body  altogether,  it  is  natural  that  the 

280 


DIVERGENCIES  AND  THEIR  RESULTS 

creating  body  not  being  checked  by  the  consideration 
of  the  expense  should  be  extremely  liberal.^ 

The  granting  of  large  Dominion  subsidies  has  also  de-     ! 
layed  the  introduction  of  direct  taxation  in  the  Provinces, 
which  would  prove  the  best  curb  on  extravagance  as  it 
would  result  in  a  more  careful  scrutiny  of  government 
expenditures. 

They  (the  people)  say:  ''the  more  we  can  get  out  of 
the  Government  the  better  for  us'* — just  as  if  the  Do- 
minion did  not  belong  to  them,  and  that  it  was  not 
their  money  that  was  being  spent.  .  .  .  The  more 
money  you  give  to  the  local  Governments  the  longer 
you  will  prevent  them  from  resorting  to  direct  taxa-  i  / 
tion,  and  only  in  that  case  will  the  people  realize  i 
where  the  money  comes  from  and  where  it  goes.^ 

Furthermore,  the  knowledge  that  the  Dominion  will 
help  them  out  in  case  of  necessity  has  caused  the  \  / 
Provinces  to  be  improvident  in  many  instances  and  to  \ 
postpone  facing  the  responsibilities  which  they  were  in-  \ 
curring  for  the  future.  Finally,  the  Canadian  subsidy 
system  has  weakened  the  idea  of  self-help  among  the 
people  and  has  retarded  the  growth  of  local  self-govern- 
ment. For  it  is  largely  owing  to  the  augmentation  of 
their  revenues  by  the  Dominion  subsidies  that  the  Pro- 
vincial government  has  come  to  carry  on  public  services 
and  to  initiate  improvements  which  ought  to  have  been 
looked  after  by  the  individual  localities  and  the  money 
provided  from  local  sources  as  in  the  United  States. 
Hence,  if  the  system  of  Dominion  subsidies  should  be 
entirely  discarded,  one  of  the  serious  imperfections  of 
present  Canadian  budget  systems  would  be  done  away 

1  Mr.  Blake — Quoted  in  Can.  Hansard,  1896,  2nd  Session,  p.  2569. 

2  Mr.  Foster — Can.  Hansard,  1906-07,  p.  5335. 

281 


THE  CANADIAN  BUDGETARY  SYSTEM 

with.  It  is,  however,  recognized  that  there  are  constitu- 
tional and  political  considerations  which  may  render  im- 
possible or  inadvisable  this  change  even  though  it  be  one 
that  is  condemned  upon  general  grounds  of  financial 
administrative  efficiency. 


282 


APPENDICES 


APPENDIX  I 

DEPARTMENT  OF  FINANCE  AND  TREASURY 
BOARD  ACT 

REVISED  STATUTES  OF  1906 

CHAPTER  23 

An  Act  respecting  the  Department  of  Finance  and  the 
Treasury  Board 

SHORT  TITLE 

1.  This  Act  may  be  cited  as  the  Department  of 
Finance  and  Treasury  Board  Act. 

DEPARTMENT  OF  FINANCE 

2.  There  shall  be  a  department  of  the  Government  of 
Canada,  which  shall  be  called  the  Department  of  Finance, 
over  which  the  Minister  of  Finance  and  Receiver  General 
for  the  time  being,  appointed  by  the  Governor  General 
by  commission  under  the  Great  Seal  of  Canada,  shall 
preside;  and  the  said  Minister  shall  hold  office  during 
pleasure  and  shall  have  the  management  and  direction 
of  the  Department.     R.S.,  c.  28,  s.  2. 

3.  The  Department  of  Finance  shall  have  the  super- 
vision, control  and  direction  of  all  matters  relating  to  the 
financial  affairs  and  public  accounts,  revenue  and  ex- 
penditure of  Canada,  which  are  not,  or  in  so  far  as  they 
are  not,  by  law,  or  by  order  of  the  Governor  in  Council, 
assigned  to  any  other  department  of  the  Government, 
and  such  other  duties  as  are,  from  time  to  time,  assigned 
to  it  by  the  Governor  in  Council.     R.S.,  c.  28,  s.  3. 

4.  The  Governor  in  Council  may  appoint  an  officer 
w^ho  shall  be  called  the  Deputy  Minister  of  Finance  and 
Receiver  General,  and  such  officers,  clerks  and  servants 
as  are  requisite  for  the  proper  conduct  of  the  business  of 

285 


THE  CANADIAN  BUDGETARY  SYSTEM 

the  Department,  all  of  whom  shall  hold  office  during 
pleasure.     R.S.,  c.  28,  s.  4. 

5.  The  Deputy  Minister  of  Finance  shall,  under  the 
Minister  of  Finance,  keep  the  accounts  with  the  financial 
agents  of  Canada  in  England,  and  with  the  bank  or 
banks  receiving  or  paying  public  moneys,  and  the  ac- 
counts of  moneys  paid  for  interest  on  Canadian  stock, 
debentures  or  other  Canadian  securities.    R.S.,  c.  28,  s.  5. 

6.  The  Deputy  Minister  of  Finance  shall  classify  all 
appropriations  of  public  moneys  and  keep  posted  up  a 
book  to  be  called  the  appropriation  book,  containing  an 
account,  under  separate  and  distinct  heads,  of  every  such 
appropriation,  whether  permanent  or  temporary,  enter- 
ing under  each  head  the  amounts  drawn  on  account  of 
such  appropriation  with  the  dates  and  names  of  the  per- 
sons to  whom  payments  are  made ;  and  shall,  under  the 
Minister  of  Finance,  keep  the  public  accounts  of  Canada. 
R.S.,  c.  28,  s.  6. 

7.  All  returns  and  statements  required  from  savings 
banks,  chartered  or  other  banks,  and  all  other  institutions 
required  to  make  financial  statements  or  returns,  shall, 
when  no  other  provision  is  made  in  that  behalf,  be  trans- 
mitted to  the  Deputy  Minister  of  Finance.  R.S.,  c. 
28,  s.  7. 

8.  All  officers  and  clerks  of  and  in  the  Department 
of  Finance  shall  respectively  have  and  perform  such 
duties  as  are  assigned  to  them  by  law  or  by  the  Governor 
in  Council,  or  by  the  Minister  of  Finance,  and  such 
arrangements,  distribution  or  union  of  the  various 
duties,  functions  and  business  devolving  on  the  several 
branches  of  the  said  Department,  or  such  amalgamation 
thereof,  may  be  made,  as  the  Minister  of  Finance,  with 
the  approval  of  the  Governor  in  Council,  from  time  to 
time  directs.     R.S.,  c.  28,  s.  8. 

TREASURY  BOARD 

9.  There  shall  be  a  board  to  be  called  the  Treasury 
Board,  consisting  of  the  Minister  of  Finance  and  any 

286 


APPENDICES 

five  of  the  ministers  belonging  to  the  King's  Privy 
Council  for  Canada,  to  be  nominated  from  time  to  time 
by  the  Governor  in  Council.  R.S.,  c.  28,  s.  9;  50-51  V., 
c.  13,  s.  I. 

10.  The  Treasury  Board  shall  act  as  a  committee  of 
the  King's  Privy  Council  for  Canada,  on  all  matters  re- 
lating to  finance,  revenue  and  expenditure,  or  public  ac- 
counts, which  are  referred  to  it  by  the  Council,  or  to 
which  the  Board  thinks  it  necessary  to  call  the  attention 
of  the  Council,  and  shall  have  power  to  require  from  any 
public  department,  board,  officer,  or  other  person,  bound 
by  law  to  furnish  the  same  to  the  Government,  any  ac- 
count, return,  statement,  document,  or  information 
which  the  Board  deems  requisite  for  the  due  perform- 
ance of  its  duties.     R.S.,  c.  28,  s.  9. 

11.  The  Minister  of  Finance  shall  be  the  Chairman 
of  the  Treasury  Board;  and  the  Deputy  Minister  of 
Finance  shall  be  ex  officio  the  Secretary  thereof,  and 
through  him  the  Board  shall  communicate  with  any  pub- 
lic department,  officer,  or  other  person.    R.S.,  c.  13,  s.  10. 

12.  A  plan  of  account  books  and  accounts,  adapted 
to  the  requirements  of  each  department  or  branch  of  the 
public  service,  in  order  to  exhibit  in  a  convenient  form 
the  whole  of  the  receipts  and  payments  in  respect  of  each 
vote,  shall  be  designed  under  the  superintendence  of  the 
Treasury  Board;  and  the  Governor  in  Council  may,  on 
report  from  the  Treasury  Board,  prescribe,  from  time  to 
time,  the  manner  in  which  each  department  of  the  public 
service  shall  keep  its  accounts.     R.S.,  c.  28,  s.  11. 

13.  The  Treasury  Board  may  direct  any  officer  or 
person  employed  in  collecting,  managing  or  accounting 
for  any  branch  of  the  revenue,  to  keep  any  books  or  ac- 
counts which  it  deems  advisable  to  direct  to  be  kept  for 
the  purpose  of  obtaining  and  furnishing  any  statistical 
information  concerning  the  trade  or  commerce  of  Can- 
ada, the  public  works  thereof,  or  other  matters  of  public 
interest.     R.S.,  c.  28,  s.  12. 


287 


APPENDIX  2 

CONSOLIDATED  REVENUE  AND  AUDIT  ACT 

REVISED  STATUTES  OF  1906 

CHAPTER  24 

An  Act  respecting  the  Public  Revenue,  the  raising  of 
Loans  authorized  by  Parliament,  and  the  auditing  of 
the  Public  Accounts. 

SHORT  TITLE 

1.  This  Act  may  be  cited  as  the  Consolidated  Revenue 
and  Audit  Act.     R.S.,  c.  29,  s.  i. 

INTERPRETATION 

2.  In  this  Act,  unless  the  context  otherwise  re- 
quires,— 

(a)  'public  moneys,'  ^public  revenue'  or  'revenue,' 
means  and  includes  and  applies  to  all  revenue  of  the 
Dominion  of  Canada,  and  all  branches  thereof,  and 
all  moneys,  whether  arising  from  duties  of  Customs, 
excise  or  other  duties,  or  from  the  post  office,  or 
from  tolls  for  the  use  of  any  canal,  railway  or  other 
public  work,  or  from  fines,  penalties  or  forfeitures 
or  from  any  rents  or  dues,  or  from  any  other  source 
whatsoever,  whether  such  moneys  belong  to  Can- 
ada or  are  collected  by  officers  of  Canada  for  or  on 
account  of  or  in  trust  for  any  province  forming  part 
of  Canada,  or  for  the  Government  of  the  United 
Kingdom,  or  otherwise; 

(b)  'certify'  includes  'examine  and  certify  if  found 
correct' ; 

(c)  'sub-accountant'  means  any  officer  or  person  re- 
ceiving or  expending  public  moneys  and  accounting 

288 


APPENDICES 

for  the  same  to  or  through  any  minister  or  officer 
of  any  public  department ; 

(d)  'department,'  when  used  in  connection  with  the 
duty  of  preparing  appropriation  accounts,  inchides 
every  pubHc  officer  to  whom  the  duties  are  assigned 
by  the  Treasury  Board; 

(e)  'accountant,'  when  used  with  reference  to  ac- 
counts, other  than  the  appropriation  accounts  of  the 
grants  of  Parliament,  which  the  Auditor  General 
is  required  by  the  Minister  of  Finance  or  the 
Treasury  Board,  under  the  authority  of  this  Act, 
to  examine  and  audit,  means  the  department  or 
officer  that  is  required  by  the  Minister  of  Finance  to 
render  the  same.     R.S.,  c.  29,  ss.  2  and  51. 

3.  Any  officer,  functionary  or  person  whose  duty  it 
is  to  receive  any  moneys  forming  part  of  the  revenue,  or 
who  is  entrusted  with  the  custody  or  expenditure  of  any 
such  moneys,  although  he  is  not  regularly  employed  in 
collecting,  managing  or  accounting  for  the  same,  shall 
be  subject  to  the  provisions  of  this  Act,  so  far  as  regards 
the  accounting  for  and  paying  over  such  moneys,  what- 
ever is  the  office  or  employment  by  virtue  of  which  he 
receives,  or  is  entrusted  with  the  same.     R.S.,  c.  29,  s.  2. 

CONSOLIDATED  REVENUE  FUND 

4.  All  public  moneys  and  revenue  over  which  the 
Parliament  of  Canada  now  has  the  power  of  appropria- 
tion shall  form  one  Consolidated  Revenue  Fund  to  be 
appropriated  for  the  public  service  ef  Canada,  in  the 
manner  and  subject  to  the  charges  hereinafter  men- 
tioned, and  in  the  following  order,  that  is  to  say: — 

First. — The  costs,  charges,  and  expenses  incident  to 
the  collection,  management  and  receipt  thereof,  subject 
to  be  reviewed  and  audited  in  such  manner  as  is  hereby 
or  is  hereafter  by  law  provided; 

Second. — The  salary  of  the  Governor  General; 

Third. — The  balance  remaining  unpaid  of  the  prin- 
cipal, and  interest  at  a  rate  not  exceeding  four  per  cen- 

289 


THE  CANADIAN  BUDGETARY  SYSTEM 

turn  per  annum,  of  the  loan  of  three  million  pounds 
sterling,  authorized  by  the  Act  passed  in  the  thirty-first 
year  of  Her  late  Majesty's  reign,  chapter  thirteen,  to  be 
raised  for  the  purpose  of  constructing  the  Intercolonial 
Railway,  upon  the  guarantee,  by  the  Commissioners  of 
Her  late  Majesty's  Treasury,  of  the  payment  of  interest 
on  such  loan  at  a  rate  not  exceeding  four  per  centum  per 
annum ; 

Fotirth. — An  annual  sum,  at  the  rate  of  one  per  cen- 
tum per  annum,  as  a  sinking  fund  on  the  entire  amount 
of  principal  money  of  the  loan  lastly  hereinbefore  men- 
tioned ; 

Fifth, — The  principal  and  interest  of  any  loan  guar- 
anteed by  the  Treasury  under  the  Act  passed  in  the 
thirty-seventh  year  of  Her  late  Majesty's  reign,  chapter 
two,  and  the  Act  of  the  Parliament  of  the  United  King- 
dom known  as  The  Canada  (Public  Works)  Loan  Act, 

1873; 

Sixth. — Such  sums  as  are  required  to  form  a  sinking- 
fund  at  the  rate  of  one  per  centum  per  annum  on  the 
entire  amount  of  the  loan  guaranteed  by  the  Treasury 
as  lastly  hereinbefore  mentioned; 

Seventh. — The  yearly  salaries  of  the  judges  of  the 
Supreme  Court  of  Canada  and  of  the  Exchequer  Court 
of  Canada.     R.S.,  c.  29,  s.  3. 

5.  The  grants  payable  to  the  several  provinces  con- 
stituting the  Dominion  of  Canada  shall  be  charged  upon 
the  Consolidated  Revenue  Fund  of  Canada,  and  payable 
out  of  any  unappropriated  moneys  forming  part  thereof. 
R.S.,  c.  29,  s.  4. 

PUBLIC  DEBT  AND  THE  RAISING  OF  LOANS  AUTHORIZED  BY 

PARLIAMENT 

6.  The  Governor  in  Council  may,  from  time  to  time, — 
(a)  make  such  regulations  as  he  deems  necessary  for 

the  management  of  the  public  debt  of  Canada  and 
the  payment  of  the  interest  thereon ;  and, 

290 


APPENDICES 

(b)  subject  to  the  provisions  of  the  two  next  follow- 
ing sections,  provide  for  the  creation  and  manage- 
ment of  a  sinking;"  fund  or  other  means  of  securing 
the  repayment  of  any  loans  raised  under  the 
authority  of  Parliament;  and, 

(c)  appoint  one  or  more  fiscal  agents  of  Canada  in  the 
city  of  London,  England,  or  elsewhere,  and  agree 
with  them  as  to  the  rate  of  compensation  to  be 
allowed  them  for  negotiating  loans,  and  for  paying 
the  interest  on  the  public  debt,  and  for  other  services 
connected  with  the  management  of  the  said  debt; 
and, 

(d)  pay  the  sums  necessary  to  provide  such  sinking 
fund  or  other  means  as  aforesaid,  and  such  compen- 
sation, out  of  the  Consolidated  Revenue  Fund. 
R.S.,  c.  29,  s.  5. 

7.  Whenever,  in  any  Act  passed  by  the  Parliament 
of  Canada,  authority  is  given  to  the  Governor  in  Council 
to  raise,  by  way  of  loan,  any  sum  of  money  for  the  pub- 
lic service,  or  the  security  of  Canada  is  authorized  to  be 
given  for  any  sum  of  money  deposited  in  any  Govern- 
ment savings  bank,  or  otherwise  entrusted  for  safe- 
keeping to  the  Government  of  Canada,  then,  unless  there 
is  some  provision  to  the  contrary  in  the  Act  by  which 
such  authority  is  -  given,  or  such  security  authorized, 
such  sum  shall,  in  the  discretion  of  the  Governor  in 
Council,  be  raised  or  such  security  given  in  one  of  the 
following  ways,  or  partly  in  one  and  partly  in  another 
or  others  thereof,  that  is  to  say : — 

(a)  By  the  issue  and  sale,  or  the  delivery  as  such 
security,  or  debentures  of  Canada,  which  shall  be 
in  such  form,  for  such  separate  sums,  and  at  such 
rate  of  interest  not  exceeding  six  per  centum  per 
annum,  and  the  principal  and  interest  whereof  shall 
be  made  payable  at  such  periods  and  places,  as  the 
Governor  in  Council  deems  most  expedient,  and 
subject  to  such  regulations  as  he  sees  fit  to  make; 

291 


THE  CANADIAN  BUDGETARY  SYSTEM 

and  such  principal  and  interest  shall  be  chargeable 
on  the  Consolidated  Revenue  Fund  ; 

(b)  by  the  issue  and  sale  or,  the  delivery  as  such 
security,  of  Canada  Dominion  stock  bearing  such 
rate  of  interest  not  exceeding  six  per  centum  per 
annum  as  is  deemed  most  advisable,  payable  half 
yearly,  the  principal  and  interest  whereof  shall  be 
chargeable  on  the  Consolidated  Revenue  Fund ;  and 
such  stock  shall  not  be  redeemable  until  the  time 
fixed  by  the  regulations  her-einafter  mentioned,  but 
at  and  after  that  time  shall  be  redeemable  at  the 
option  of  the  Governor  in  Council  on  giving  six 
months'  notice  of  such  redemption,  and  the  stock 
shall  be  subject  to  such  regulations  as  to  the  inscrip- 
tion, transfer,  management  and  redemption  thereof, 
as  the  Governor  in  Council  sees  fit  to  make ; 

(c)  By  the  granting  of  terminable  annuities  charge- 
able on  the  Consolidated  Revenue  Fund,  such  an- 
nuities being  granted  on  terms  in  accordance  with 
the  most  approved  English  tables,  and  based  on  a 
rate  of  interest  not  exceeding  six  per  centum  per 
annum,  and  subject  to  such  regulations  as  the  Gov- 
ernor in  Council  sees  fit  to  make ; 

(d)  By  the  issue  and  sale,  from  time  to  time,  of  ex- 
chequer bills  or  exchequer  bonds,  in  sums  of  not  less 
than  four  hundred  dollars,  in  such  form,  and  bear- 
ing such  rate  of  interest  not  exceeding  six  per 
centum  per  annum,  and  redeemable  at  such  periods 
and  places  as  the  Governor  in  Council  deems  most 
advisable,  and  subject  to  such  regulations  as  he  sees 
fit  to  make.     R.S.,  c.  29,  s.  6. 

8.  Upon  authorizing  the  issue  of  debentures  of  Can- 
ada or  Canada  Dominion  stock  under  the  last  preceding 
section  the  Governor  in  Council  may  provide  for  a  special 
sinking  fund  with  respect  to  such  issue,  and  may,  at  any 
time,  provide  for  a  general  sinking  fund  for  all  such  por- 
tions of  the  debentures  or  stock  of  Canada  as  have  been 
or  are  hereafter  issued  without  provision  for  a  sinking 
*  292 


APPENDICES 

fund:  Provided  that  the  amount  to  be  invested  in  any 
such  sinking  fund  shall  not  exceed  one-half  of  one  per 
centum  per  annum  on  the  amount  of  the  debentures  or 
stock  to  which  it  relates.     R.S.,  c.  29,  s.  6. 

9.  The  Governor  in  Council  may  from  time  to  time 
direct  that  the  whole  or  any  portion  of  the  stock  of  the 
Dominion  of  Canada,  heretofore  issued  or  inscribed,  or 
hereafter  issued  or  inscribed,  and  forming-  the  whole  or 
part  of  the  public  debt  of  Canada,  be  inscribed  and  trans- 
ferred in  a  register  kept  in  the  United  Kingdom  at  such 
place  and  by  such  bank,  colonial  officer,  or  person  as  he 
from  time  to  time  appoints.     63-64  V.,  c.  11,  s.  i. 

10.  The  Governor  in  Council  is  hereby  authorized  to 
make  any  declaration  and  take  any  steps  necessary  to 
record  such  inscribed  stock,  or  any  portion  thereof, 
under  and  in  accordance  with  the  provisions  of  the  im- 
perial Acts  known  as  The  Colonial  Stock  Acts,  I'^yj  to 
1900.     63-64  v.,  c.  II,  s.  2. 

11.  The  Minister  of  Finance  may,  out  of  the  Con- 
solidated Revenue  Fund  of  Canada,  pay,  satisfy  and  dis- 
charge any  judgment,  decree,  rule,  or  order  of  the  court 
in  England,  which  under  the  provisions  of  section  twenty 
of  The  Colonial  Stock  Act,  1^77 ^  is  to  be  compHed  with 
by  the  registrar  of  the  inscribed  stock  of  Canada  in  Eng- 
land.    63-64  v.,  c.  II,  s.  3. 

12.  The  Governor  in  Council  may,  from  time  to  time, 
as  the  interests  of  the  public  service  require,  change  the 
form  of  any  part  of  the  then  existing  funded  debt  of 
Canada,  including  any  debentures  for  which  Canada  is 
liable,  by  substituting  one  class  of  the  securities  afore- 
said for  another  or  for  such  debentures,  if  neither  the 
capital  or  the  debt,  nor  the  annual  charge  for  interest  is 
thereby  increased:  Provided  that  in  any  case  in  which 
four  per  centum  Dominion  stock  or  five  per  centum 
Dominion  stock  or  debentures  is  or  are  substituted  for 
securities  bearing  a  higher  rate  of  interest,  the  amount 
of  the  capital  may  be  increased  by  an  amount  not  exceed- 
ing the  difference  between  the  then  present  value  of  the 

293 


THE  CANADIAN  BUDGETARY  SYSTEM 

security  bearing  the  higher  interest  and  that  of  the  four 
per  centum  stock  or  five  per  centum  stock  or  debentures 
substituted  for  it. 

2.  No  such  substitution  shall  be  made,  unless  the  con- 
sent of  the  holder  of  the  security  for  which  another  is 
substituted  is  obtained,  or  such  security  is  previously 
purchased  or  redeemed  by  or  on  account  of  Canada. 

3.  Such  substitution  may  be  made  by  the  sale  of  the 
one  class  of  securities  and  the  purchase  of  those  for 
which  it  is  desired  to  substitute  them.     R.S.,  c.  29,  s.  7. 

13.  The  Governor  in  Council  may,  from  time  to  time, 
as  the  exigencies  of  the  public  service  require,  in  the 
event  of  the  Consolidated  Revenue  Fund  being  at  any 
time  insufficient  to  meet  the  charges  placed  thereon  by 
law,  direct  the  proper  officer  to  raise,  by  temporary  loans 
chargeable  on  the  said  fund,  in  such  manner  and  form, 
in  such  amounts,  for  such  periods  not  exceeding  six 
months,  at  rates  of  interest  not  exceeding  seven  per 
centum  per  annum,  as  the  Governor  in  Council  directs, 
such  sums  as  are  necessary  to  enable  the  said  fund  to 
meet  such  charges. 

2.  The  sums  to  be  raised  shall  never  exceed  the 
amount  of  the  deficiencies  in  the  Consolidated  Revenue 
Fund  to  meet  the  charges  thereon,  then  due  or  payable 
either  as  principal  or  interest,  and  shall  be  appHed  to  no 
other  purpose  whatsoever. 

3.  An  account  in  detail  of  all  such  temporary  loans 
shall  be  laid  before  the  House  of  Commons  within  the 
first  fifteen  days  of  the  session  then  next  ensuing.  R.S., 
c.  29,  s.  8. 

14.  If,  at  the  end  of  any  month,  by  reason  of  the 
amount  of  deposits  in  the  savings  banks  established 
under  the  Savings  Bank  Act,  and  the  issue  and  sale  of 
the  five  per  centum  Dominion  stock  and  any  other  public 
securities  the  issue  and  sale  of  which  is  authorized  by 
this  Act,  or  by  any  of  the  said  causes,  the  amount  of  the 
public  debt  authorized  by  Parliament  is  exceeded,  the 
Minister  of  Finance  shall  report   such  excess   to  the 

.294 


APPENDICES 

Treasury  Board,  and  the  Treasury  Board  shall  there- 
upon direct  him  to  purchase,  to  the  extent  of  such  excess, 
debentures  of  the  Dominion  of  Canada  already  issued, 
and  such  debentures  shall  then  be  cancelled,  or  may  be 
held  in  reserve  until  there  is  authority  to  reissue  them. 
R.S.,  c.  121,  s.  i8. 

15.  The  regulations  made  or  to  be  made  by  the  Gov- 
ernor in  Council,  as  to  the  inscription,  transfer,  manage- 
ment and  redemption  of  any  Canada  Dominion  stock, 
debentures  or  other  Canada  securities  hereinbefore 
mentioned,  shall,  in  so  far  as  they  are  not  inconsistent 
with  the  Act  under  which  they  are  made,  have  the  same 
force  and  effect  as  if  embodied  and  enacted  in  an  Act  of 
the  Parliament  of  Canada.     R.S.,  c.  29,  s.  9. 

16.  No  officer  of  the  Government  of  Canada  em- 
ployed in  the  inscription,  transfer,  management  or  re- 
demption of  any  such  stock  or  securities,  or  in  the  pay- 
ment of  any  dividend  or  interest  thereon,  shall  be  bound 
to  see  to  the  execution  of  any  trust  expressed  or  implied 
to  which  such  stock  or  securities  are  subject,  nor  shall  be 
liable  in  any  way  to  any  person  for  anything  by  him  done 
as  such  officer,  in  accordance  with  any  such  regulation. 
R.S.,  c.  29,  s.  9. 

17.  The  Deputy  Minister  of  Finance  shall, — 

(a)  countersign  all  Canada  debentures; 

(b)  keep  a  debenture  book,  which  shall  contain  a 
record  and  description  of  all  debentures  outstanding 
or  authorized  to  be  issued,  showing  the  date  of  issue, 
period  of  redemption,  when  they  were  cancelled,  and 
times  of  payment  of  interest,  and  an  interest  ac- 
count respecting  them ;  and, 

(c)  keep  a  register  of  provincial  notes  or  Dominion 
notes  issued  or  cancelled. 

2.  The  Auditor  General  and  the  Deputy  Minister  of 
Finance  shall  examine  and  cancel  debentures,  Dominion 
or  provincial  notes,  and  other  securities  representing  the 
debt  of  Canada  and  which  have  been  redeemed.  R.S., 
c.  29,  ss.  10  and  11. 

295 


THE  CANADIAN  BUDGETARY  SYSTEM 

1 8.  Nothing  in  this  Act  shall  be  construed  in  altering 
or  affecting  the  provisions  of  the  Dominion  Notes  Act, 
or  the  debentures  to  be  issued  and  held  for  securing  the 
redemption  of  such  notes,  or  in  any  way  to  authorize  any 
increase  of  the  public  debt  without  the  express  authority 
of  Parliament,  except  in  the  manner  and  to  the  extent 
hereinbefore  provided  in  case  of  the  substitution  of  four 
per  centum  Dominion  stock  or  fivt  per  centum  Dom- 
inion stock  for  other  securities,  and  except  also  as  to 
temporary  loans  raised  in  the  manner  and  to  the  extent 
hereinbefore  provided  in  the  event  of  the  Consolidated 
Revenue  Fund  being  at  any  time  insufficient  to  meet  the 
charges  placed  thereon  by  law.     R.S.,  c.  29,  s.  12. 

COLLECTION   OF  THE  REVENUE 

19.  The  Governor  in  Council  may,  from  time  to  time, 
determine  what  officers  or  persons  it  is  necessary  to  em- 
ploy in  collecting,  managing  or  accounting  for  the 
revenue,  and  in  carrying  into  effect  the  laws  thereunto 
relating,  or  for  preventing  any  violation  of  such  laws; 
and  may  assign  their  names  of  office,  and  such  salaries 
or  pay  for  their  labour  and  responsibility  in  the  execution 
of  the  duties  of  their  respective  offices  and  employments, 
as  to  the  Governor  in  Council  seems  reasonable  and 
necessary,  and  may  appoint  the  times  and  manner  in 
which  the  same  shall  be  paid:  Provided  that  no  such 
officer  so  appointed  shall  receive  a  higher  annual  salary 
than  is  allowed  in  his  case  by  any  Act  of  the  Parliament 
of  Canada  then  in  force  respecting  the  Civil  Service 
generally;  nor  shall  any  such  salary  be  paid  until  voted 
by  Parliament.     R.S.,  c.  29,  s.  13. 

20.  The  salary  or  pay  allowed  to  any  such  officer  or 
person  as  aforesaid  shall  be  in  lieu  of  all  fees,  allowances 
or  emoluments  of  any  kind  whatsoever,  except  actual 
and  authorized  disbursements,  shares  or  seizures,  for- 
feitures and  penalties. 

2.  No  such  officer  or  person,  receiving *a. salary  at  or 
exceeding  the  rate  of  one  thousand  dollars  per  annum, 

296 


APPENDICES 

shall  exercise  any  other  calHng,  profession,  trade  or  em- 
ployment whatsoever,  with  a  view  to  derive  profit  there- 
from., directly  or  indirectly,  or  shall  hold  any  other  office 
of  profit  whatsoever,  except,  in  either  case,  with  express 
permission  of  the  Governor  in  Council.    R.S.,  c.  29,  s.  14. 

21.  No  officer  or  person  regularly  employed  in  the 
collection  or  management  of  the  revenue,  or  in  account- 
ing for  the  same,  shall,  while  he  remains  such  officer  or 
so  employed,  be  compelled  to  serve  in  any  other  public 
office,  or  in  any  municipal  or  local  office,  or  on  any  jury 
or  inquest,  or  in  the  militia.     R.S.,  c.  29,  s.  15. 

22.  Every  person  appointed  to  any  office  or  employ- 
ment relative  to  the  collection  or  management  of  the 
revenue,  or  to  the  accounting  for  the  same,  shall,  upon 
his  admission  to  such  office  or  employment,  take,  before 
such  officer  as  the  Governor  in  Council  appoints  to  re- 
ceive the  same,  an  oath  in  the  form  following,  that  is  to 
say: — 

*I,  A.  B.,  do  swear  to  be  true  and  faithful  in  the  execu- 
tion, to  the  best  of  my  knowledge  and  power,  of  the  trust 
committed  to  my  charge,  by  my  appointment  as  , 

and  that  I  will  not  require,  take  or  receive  any  fee,  per- 
quisite, gratuity  or  reward,  or  emolument,  whether 
pecuniary  or  of  any  other  sort  or  description  whatever, 
either  directly  or  indirectly,  for  any  service,  act,  duty, 
matter  or  thing  done  or  performed,  or  to  be  done  or  per- 
formed, in  the  execution  or  discharge  of  any  of  the  duties 
of  my  said  office  or  employment,  on  any  account  what- 
soever, other  than  my  salary,  or  what  shall  be  allowed 
me  by  law,  or  by  order  of  the  Governor  in  Council.  So 
help  me  God.'     R.S.,  c.  29,  s.  16. 

2}^.  The  Governor  in  Council  may,  from  time  to 
time, — 

(a)  make  such  divisions  of  Canada  into  ports,  revenue 

districts  or  otherwise,  as  are  required  with  regard 

to  the  collection  or  management  of  the  revenue ;  and, 

(6)  assign  the  officers  or  persons  by  whom  any  duty 

or  service  relative  to  any  such  purpose  shall  be  per- 

297 


THE  CANADIAN  BUDGETARY  SYSTEM 

formed  within  or  for  any  such  district  or  division, 
and  the  places  within  the  same  where  such  duty  or 
service  shall  be  performed ;  and, 
(c)  make  all  such  regulations  concerning  such  officers 
and  persons,  and  the  conduct  and  management  of 
the  business  to  them  entrusted,  as  are  consistent 
with  the  law,  and  as  he  deems  expedient  for  carry- 
ing it  into  effect,  in  the  manner  best  adapted  to  pro- 
mote the  public  good. 

2.  Any  general  regulation  or  order  made  by  the  Gov- 
ernor in  Council  for  any  purpose  whatsoever  for  which 
an  order  or  regulation  may  be  so  made  under  the  pro- 
visions of  this  Act,  shall  apply  to  each  particular  case 
within  the  intent  and  meaning  of  such  general  regula- 
tion or  order,  as  fully  and  effectually  as  if  the  same  had 
been  made  with  reference  to  such  particular  case,  and 
the  officers,  functionaries  or  persons  concerned  had  been 
specially  named  therein.     R.S.,  c.  29,  s.  17. 

24.  Every  person  employed  on  any  duty  or  service 
relating  to  the  collection  or  management  of  the  revenue, 
by  the  order  or  with  the  concurrence  of  the  Governor  in 
Council,  shall  be  deemed  to  be  the  proper  officer  for  that 
duty  or  service ;  and  every  act,  matter  or  thing  required 
by  any  law  in  force  to  be  done  or  performed  by,  to  or 
with  any  particular  officer  nominated  for  that  purpose  in 
such  law,  which  is  done  or  performed  by,  to  or  with  any 
person  appointed  or  authorized  by  the  Governor  in 
Council  to  act  for  or  on  behalf  of  such  particular  officer, 
shall  be  deemed  to  be  done  or  performed  by,  to  or  with 
such  particular  officer. 

2.  Every  act,  matter  or  thing  required  by  any  law,  at 
any  time  in  force,  to  be  done  or  performed  at  any  par- 
ticular place  within  any  division  of  Canada,  made  by  the 
Governor  in  Council  with  regard  to  the  collection  or 
management  of  the  revenue,  which  is  done  or  performed 
at  any  place  within  such  division,  shall  be  deemed  to  be 
done  or  performed  at  the  particular  place  so  'required  by 
law.     R.S.,  c.  29,  s.  18. 

298 


APPENDICES 

25.  Any  officer  or  person  employed  in  the  collection, 
management  or  accounting  for  any  branch  of  the 
revenue  may  be  employed  in  the  collection,  management 
or  accounting  for  any  other  branch  thereof,  whenever  it 
is  deemed  advantageous  for  the  public  service  so  to  em- 
ploy him.     R.S.,  c.  29,  s.  19. 

26.  The  Governor  in  Council  may,  from  time  to 
time, — 

(a)  appoint  the  hours  of  the  general  attendance  of  the 
officers  and  persons  employed  in  the  collection  and 
management  of  the  revenue,  at  their  proper  offices 
and  places  of  employment;  and, 

(b)  appoint  the  times  during  such  hours,  or  the  sea- 
sons of  the  year,  at  which  any  particular  portions 
of  the  duties  of  such  officers  or  other  persons  shall 
be  performed  by  them  respectively. 

2.  A  notice  of  the  hours  of  general  attendance  so  ap- 
pointed shall  be  kept  constantly  posted  up  in  some  con- 
spicuous place  in  such  offices  and  places  of  employment. 
R.S.,  c.  29,  s.  20. 

AUDITOR  GENERAL  AND  HIS  OFFICE 

2y.  The  Governor  General  may,  for  the  more  com- 
plete examination  of  the  public  accounts  of  Canada,  and 
for  the  reporting  thereon  to  the  House  of  Commons,  ap- 
point an  officer,  under  the  Great  Seal  of  Canada,  to  be 
called  the  Auditor  General  of  Canada,  and  such  officer 
may  be  paid  out  of  the  Consolidated  Revenue  Fund,  a 
salary  of  four  thousand  dollars  per  annum.^  R.S.,  c.  29, 
s.  2i;5i  v.,  c.  7,  s.  I. 

28.  The  Auditor  General  shall  hold  office  during  good 
behavior,  but  shall  be  removable  by  the  Governor  Gen- 
eral on  address  of  the  Senate  and  House  of  Commons. 
R.S.,  c.  29,  s.  22. 

29.  The  Auditor  General  shall  be  subject  to  the  pro- 
visions of  the  Civil  Service  Superannuation  and  Retire- 
ment Act  except  as  regards  his  tenure  of  office.  51  V., 
c.  7,  s.  2. 

1  Since  1908,  $5,000. 

299 


THE  CANADIAN  BUDGETARY  SYSTEM 

30.  The  Governor  in  Council  shall,  from  time  to  time, 
appoint  the  officers,  clerks  and  other  persons  in  the  office 
of  the  Auditor  General,  and  may  regulate  the  numbers 
and  salaries  of  the  respective  grades  or  classes  into 
which  the  said  officers,  clerks  and  others  shall  be  divided. 
R.S.,  c.  29,  s.  23. 

31.  The  Auditor  General  may,  from  time  to  time, 
make  orders  and  rules  for  the  conduct  of  the  internal 
business  of  his  office,  and  prescribe  regulations  and 
forms  for  the  guidance  of  principal  accountants  and 
sub-accountants  in  making  up  and  rendering  their 
periodical  accounts  for  examination:  Provided  that  all 
such  rules,  regulations  and  forms  shall  be  approved  by 
the  Treasury  Board  previously  to  the  issue  thereof. 
54-55  v.,  c.  16,  s.  I. 

32.  The  Auditor  General  may  suspend  or  remove  any 
of  the  officers,  clerks  and  others  employed  in  his  office. 
54-55  v.,  c.  16,  s.  I. 

33.  Subject  to  the  provisions  of  the  Civil  Service  Act 
with  respect  to  promotions,  the  Auditor  General  may 
promote  any  of  the  officers,  clerks  or  employees  in  his 
office,  and  shall  have  with  respect  to  such  promotions  all 
the  powers  which  under  the  Civil  Service  Act  are  vested 
in  heads  and  deputy  heads  of  departments,  and  he  shall 
also  have  in  respect  of  promotions  to  chief  clerkships, 
grade  A,  the  powers  by  the  said  Act  vested  in  the  Gov- 
ernor in  Council:  Provided  that  every  promotion  of  an 
officer,  clerk  or  employee  in  the  said  office  shall  be  re- 
ported to  the  Governor  in  Council  within  fifteen  days 
after  it  has  been  made.  54-55  V.,  c.  16,  s.  i ;  3  E.  VII., 
c.  9,  s.  8.  Repealed  July  20,  1908  and  the  following  sec- 
tion substituted : 

Subject  to  the  provisions  of  The  Civil  Service  Act  with 
respect  to  promotions,  the  Auditor  General  may  promote 
for  merit  any  of  the  officers,  clerks  or  employees  in  his 
office,  and  shall  have,  with  respect  to  such  promotion,  all 
the  powers  which  under  The  Civil  Service  Amendment 
Act,  1908,  are  vested  in  the  Governor  in  Council  acting 

300 


APPENDICES 

upon  .the  recommendation  of  the  head  of  a  department 
and  the  report  of  the  deputy  head  in  regard  thereto; 
provided  that  every  promotion  of  an  officer,  clerk  or 
employee  in  the  said  office  shall  be  reported  to  the  Gov- 
ernor in  Council  within  fifteen  days  after  it  has  been 
made. 

34.  In  any  case  in  which  the  Auditor  General  deems 
it  necessary  to  report  for  the  information  of  the  Gov- 
ernor in  Council,  such  report  shall  be  made  through  the 
Minister  of  Finance.     54-55  V.,  c.  16,  s.  i. 

PUBLIC  MONEYS HOW  DEALT  WITH 

35.  All  public  moneys,  from  whatever  source  of 
revenue  derived,  shall  be  paid  to  the  credit  of  the  account 
of  the  Minister  of  Finance  and  Receiver  General  through 
such  officers,  banks  or  persons,  and  in  such  manner  as 
the  said  Minister,  from  time  to  time,  directs  and  appoints. 

2.  All  moneys  received  by  any  officer,  clerk  or  em- 
ployee of  the  Senate  or  House  of  Commons  of  Canada 
as  fees  or  sums  in  any  way  payable  in  connection  with 
any  proceedings  before  Parliament,  or  any  Bills  pre- 
sented to,  or  Acts  passed  by  Parliament,  or  any  copies 
of  any  such  proceedings,  Bills  or  Acts,  shall  forthwith  be 
deposited  by  the  accountant  of  either  House  to  the  credit 
of  the  aforesaid  account  in  such  bank  as  he  from  time  to 
time  designates ;  and  the  moneys  so  deposited  shall  form 
part  of  the  Consolidated  Revenue  Fund  of  Canada. 

3.  Refunds,  in  whole  or  in  part,  of  any  moneys  re- 
ceived and  deposited  as  provided  in  the  last  preceding 
subsection,  and  payments  in  connection  with  the  said 
proceedings,  Bills  or  Acts,  directed  to  be  made  by  the 
Senate  and  the  House  of  Commons,  or  made  in  accord- 
ance with  the  rules  and  standing  orders  of  either  House, 
shall  be  payable  out  of  the  Consolidated  Revenue  Fund 
of  Canada.     R.S.,  c.  29,  s.  25 ;  56  V.,  c.  8,  ss.  i  and  2. 

36.  The  Treasury  Board  may,  from  time  to  time, — 
(a)  appoint  the  times  and  mode  in  which  any  officer 
or  person  employed  in  the  collection  or  manage- 

301 


THE  CANADIAN  BUDGETARY  SYSTEM 

ment  of,  or  the  accounting  for  any  part  of  the  reve- 
nue,  shall  account   for  and  pay  over  the  public 
moneys  which  come  into  his  hands ;  and, 
(b)  determine  the  times  and  mode  in  which,  and  the 
officer  by  whom,  any  licenses  on  which  any  duty  is 
payable  are  to  be  issued : 
Provided  that  such  accounts  and  payments  shall  be  ren- 
dered and  made  by  such  officers  and  persons  respectively 
at  least  once  every  month.     R.S.,  c.  29,  s.  26;  51  V.,  c. 
7,  s.  3. 

37.  The  Minister  of  Customs,  the  Minister  of  Inland 
Revenue,  the  Postmaster  General  and  all  other  ministers, 
and  all  deputy  ministers,  officers,  clerks  or  persons 
charged  with  the  receipt  of  public  moneys,  shall  cause 
the  gross  revenues  of  their  several  departments  or  offices 
to  be  paid  at  such  times  and  under  such  regulations  as 
the  Minister  of  Finance,  from  time  to  time,  prescribes, 
to  an  account  to  be  called  the  account  of  the  Minister  of 
Finance  and  Receiver  General,  at  such  bank  or  banks  as 
are  determined  by  the  Minister  of  Finance,  and  daily  ac- 
counts of  such  moneys  so  deposited  shall  be  rendered  to 
the  Auditor  General  in  such  form  as  the  Treasury  Board 
prescribes.     R.S.,  c.  29,  s.  27. 

38.  Every  officer  of  the  Customs  or  of  the  Inland 
Revenue,  and  every  officer  otherwise  employed  in  the 
collection  of  the  revenue,  rceiving  money  for  the  Crown, 
shall  deposit  the  same  to  the  credit  of  the  account  of  the 
Minister  of  Finance  and  Receiver  General,  from  time  to 
time,  in  such  bank  as  the  said  Minister  appoints:  Pro- 
vided that  where  such  money  is  received  at  a  place  where 
there  is  no  bank  into  which  it  can  conveniently  be  paid, 
the  same  shall  be  paid  over  in  such  manner  as  the  Min- 
ister of  Finance  directs;  and  accounts  of  such  money 
shall  be  rendered  to  the  Auditor  General  in  such  form 
as  the  Treasury  Board  prescribes. 

2.  Every  such  officer  shall  keep  his  cash 'book  written 
up  daily. 

302 


APPENDICES 

3.  .  All  the  books,  accounts  and  papers  of  such  officer 
shall,  at  all  times  during  office  hours,  be  open  to  the 
inspection  and  examination  of  any  officer  or  person 
whom  the  Minister  of  Finance  authorizes  to  inspect  or 
examine  the  same. 

4.  Daily  accounts  of  the  moneys  so  deposited  shall  be 
rendered  to  the  Auditor  General  in  such  form  as  the 
Treasury  Board  prescribes.     R.S.,  c.  29,  s.  28. 

EXPENDITURE  OF  MONEY  GRANTED  BY  PARLIAMENT 

39.  When  any  sum  of  money  has  been  granted  to  His 
Majesty  by  Parliament  to  defray  expenses  for  any  speci- 
fied public  service,  the  Governor  General  may,  from  time 
to  time,  under  his  sign  manual,  countersigned  by  a  mem- 
ber of  the  Treasury  Board,  authorize  and  require  the 
Minister  of  Finance  to  issue  out  of  the  moneys  in  his 
hands,  appropriated  for  defraying  the  expenses  of  such 
service,  the  sums  required,  from  time  to  time,  to  defray 
such  expenses,  not  exceeding  the  amount  of  the  sum  so 
voted  or  granted.     R.S.,  c.  29,  s.  29. 

40.  When  any  sum  of  money  has  been  granted  to  His 
Majesty  by  Parliament,  to  defray  expenses  for  any  speci- 
fied public  service,  and  as  soon  as  the  Governor  General 
has  issued  his  warrant  authorizing  the  payment  of  such 
sum  or  sums  as  are  required  to  defray  such  expenses,  the 
Minister  of  Finance  may,  from  time  to  time,  on  the  ap- 
plication of  the  Auditor  General,  cause  credits  to  be 
issued  in  favour  of  the  deputy  heads,  officers,  clerks  or 
other  persons  connected  with  the  several  departments  or 
services  charged  with  expenditure  of  the  moneys  so 
authorized. 

2.  Such  credits  shall  issue  on  the  several  banks  au- 
thorized to  receive  public  moneys. 

3.  Statements  in  duplicate  of  moneys  drawn  for 
under  such  credits,  together  with  the  cheques  paid  by 
the  banks  in  connection  therewith,  shall  be  rendered 
under  such  forms,  and  once  in  each  month  or  more  often, 
at  such  times  as  the  Treasury  Board  directs,  and  one 
duplicate  of  such  statement,  together  with  the  cheques, 

303 


THE  CANADIAN  BUDGETARY  SYSTEM 

shall  be  rendered  to  the  Auditor  General,  and  the  other 
duplicate  to  the  Minister  of  Finance. 

4.  The  Auditor  General,  being  satisfied  of  the  cor- 
rectness of  the  statement,  may  request  the  Minister  of 
Finance  to  cause  cheques  to  be  prepared  to  reimburse  the 
banks  for  advances  under  such  credits  to  cover  the  ex- 
penditures made  or  authorized. 

5.  Such  cheques  shall  be  signed  by  the  Minister  of 
Finance  and  countersigned  by  the  Auditor  General,  or 
signed  and  countersigned  by  their  respective  deputies  or 
officers  thereunto  duly  authorized. 

6.  No  such  credit  shall  issue  in  favour  of  any  officer 
or  other  person  in  excess  of  any  appropriation  authorized 
by  Act  of  Parliament.     R.S.,  c.  29,  s.  30. 

41.  The  Auditor  General  shall  see  that  no  cheque 
issues  for  the  payment  of  any  public  money  for  which 
there  is  no  direct  parliament  appropriation,  or  in  excess 
of  any  portion  of  such  appropriation,  the  expenditure  of 
which  has  been  authorized  by  the  Governor  in  Council. 

2.  The  Auditor  General  shall  report  to  the  Treasury 
Board,  through  the  Minister  of  Finance,  any  case  in 
which  a  sub-accountant  has  expended  money  out  of  the 
proceeds  of  any  accountable  credit,  for  any  purpose  for 
which  there  is  no  legislative  authority,  or  beyond  the 
amount  for  which  there  is  such  authority,  or  for  any 
other  appropriation  or  purpose  not  connected  with  such 
credit.     51  V.,  c.  7,  s.  4. 

42.  No  cheque  for  public  money  shall  issue  except 
upon  the  certificate  of  the  Auditor  General  that  there  is 
parliamentary  authority  for  the  expenditure,  save  only 
in  the  following  cases : — 

(a)  If,  upon  any  application  for  a  cheque,  the  Auditor 
General  has  reported  that  there  is  no  parliamentary 
authority  for  issuing  it,  then  upon  the  written 
opinion  of  the  Minister  of  Justice  that  there  is  such 
authority,  citing  it,  the  Treasury  Board  may  au- 
thorize the  Deputy  Minister  of  Finance  to  prepare 
the  cheque,  irrespective  of  the  Auditor  General's 
report ; 

304 


APPENDICES 

(b)  If,  when  Parliament  is  not  in  session,  any  ac- 
cident happens  to  any  pubHc  work  or  building  which 
requires  an  immediate  outlay  for  the  repair  thereof, 
or  any  other  occasion  arises  when  any  expenditure, 
not  foreseen  or  provided  for  by  Parliament,  is 
urgently  and  immediately  required  for  the  public 
good,  then  upon  the  report  of  the  Minister  of 
Finance  that  there  is  no  parliamentary  provision, 
and  of  the  minister  having  charge  of  the  service  in 
question  that  the  necessity  is  urgent,  die  Governor 
in  Council  may  order  a  special  warrant  to  be  pre- 
pared, to  be  signed  by  the  Governor  General  for  the 
issue  of  the  amount  estimated  to  be  required,  which 
shall  be  placed  by  the  Minister  of  Finance  to  a 
special  account,  against  which  cheques  may  issue 
from  time  to  time,  in  the  usual  form,  as  they  are 
required.     R.S.,  c.  29,  s.  32;  51  V.,  c.  7,  s.  5. 

43.  If  the  Auditor  General  has  refused  to  certify  that 
a  cheque  of  the  Minister  of  Finance  may  issue,  on  the 
ground  that  the  money  is  not  justly  due,  or  that  it  is  in 
excess  of  the  authority  granted  by  Council,  or  for  any 
reason  other  than  that  there  is  no  parliamentary  au- 
thority, then  upon  a  report  of  the  case  prepared  by  the 
Auditor  General  and  the  Deputy  Minister  of  Finance, 
the  Treasury  Board  shall  be  the  judge  of  the  sufficiency 
of  the  Auditor  General's  objection,  and  may  sustain  him 
or  order  the  issue  of  the  cheque  in  its  discretion.  R.S., 
c.  29,  s.  12, 

44.  The  Auditor  General  shall,  in  all  cases  mentioned 
in  the  two  sections  last  preceding,  prepare  a  statement 
of  all  such  legal  opinions,  reports  of  council,  special  war- 
rants and  cheques  issued  without  his  certificate,  and  of 
all  expenditures  incurred  in  consequence  thereof,  which 
he  shall  deliver  to  the  Minister  of  Finance,  who  shall 
present  the  same  to  Parliament  not  later  than  the  third 
day  of  the  session  thereof  then  next  ensuing.  R.S.,  c. 
29,  s.  32. 

305 


THE  CANADIAN  BUDGETARY  SYSTEM 

45.  No  payment  shall  be  authorized  b}^  the  Auditor 
General  in  respect  of  work  performed,  or  material  sup- 
plied by  any  person  in  connection  with  any  part  of  the 
public  service  of  Canada,  unless,  in  addition  to  any  other 
voucher  or  certificate  which  is  required  in  that  behalf, 
the  officer,  under  whose  special  charge  such  part  of  the 
public  service  is,  certifies  that  such  work  has  been  per- 
formed, or  such  materials  supplied,  as  the  case  may  be, 
and  that  the  price  charged  is  according  to  contract,  or  if 
not  ,covered  by  a  contract,  is  fair  and  just.  R.S.,  c.  29, 
s.  33- 

ACCOUNTS  AND  AUDIT  OF  ACCOUNTS 

46.  The  public  accounts  of  Canada  shall  be  kept  by 
double  entry  in  the  office  of  the  Ministry  of  Finance. 

2.  An  annual  statement  shall  be  prepared  as  soon  as 
possible  after  the  termination  of  each  fiscal  year  ex- 
hibiting,— 

(a)  the  state  of  the  public  debt  and  the  amount  charge- 
able against  each  of  the  public  works  for  which  any 
part  of  the  debt  has  been  contracted ; 

(b)  the  state  of  the  Consolidated  Revenue  Fund  and 
the  various  trusts  and  special  funds  under  the  man- 
agement of  the  Government  of  Canada; 

(c)  such  other  accounts  and  matters  as  are  required 
to  show  what  the  liabilities  and  assets  of  Canada 
really  are  at  the  date  of  such  statement.  R.S.,  c. 
29,  s.  34. 

47.  The  capital  represented  by  deposits  in  the  savings 
banks  in  Nova  Scotia  and  New  Brunswick,  in  deposit 
accounts  as  to  which  there  have  been  no  deposits  or  with- 
drawals since  the  first  day  of  July,  one  thousand  eight 
hundred  and  sixty-seven,  shall  not  be  charged  against 
those  provinces  respectively  as  part  of  the  debt  with 
which  they  entered  the  Union,  but  all  such  accounts  shall 
be  transferred  to  a  suspense  ledger,  and  if  any  deposit  or 
withdrawal  is  made  in  any  such  account,  it  shall  be 
removed  from  the  suspense  ledger,  and  .  the  capital 
represented  by  such  account,  and  the  interest  accrued 

306 


APPENDICES 

since  the  first  day  of  July,  one  thousand  eight  hundred 
and  sixty-seven,  shall  be  charged  against  Nova  Scotia  or 
Njew  Brunswick,  as  the  case  may  be.     R.S.,  c.  121,  s.  21. 

48.  The  Minister  of  Finance  shall  cause  an  account 
to  be  prepared  and  transmitted  to  the  Auditor  General 
on  or  before  the  thirtieth  day  of  June  in  every  year, 
showing  the  issues  made  from  the  Consolidated  Revenue 
Fund  in  the  fiscal  year  ended  on  the  thirty-first  day  of 
March  preceding,  for  services  directly  under  his  control. 

2.  Such  accounts  and  the  reports  of  the  Auditor  Gen- 
eral thereon  shall  be  laid  before  the  House  of  Commons 
by  the  Minister  of  Finance  on  or  before  the  thirty-first 
day  of  October  next,  following,  if  Parliament  is  then 
sitting,  or  if  not  sitting  then  within  one  week  after  Par- 
liament is  next  assembled.  51  V.,  c.  7,  s.  6;  6.  E.  VII., 
c.  12,  ss.  I  and  3. 

49.  The  Deputy  Minister  of  Finance  shall  prepare 
and  submit  to  the  Minister  of  Finance  the  public  accounts 
to  be  annually  laid  before  Parliament.  R.S.,  c.  29,  s.  36; 
51  v.,  c.  7,  s.  7. 

50.  The  public  accounts  shall  include  the  period  from 
the  first  day  of  April  in  one  year  to  the  thirty-first  day  of 
March  in  the  next  year,  which  period  shall  constitute  the 
fiscal  year;  all  estimates  submitted  to  Parliament  shall 
be  for  the  services  coming  in  course  of  payment  during 
the  fiscal  year;  and  all  balances  of  appropriation  which 
remain  unexpended  at  the  end  of  the  fiscal  year  shall 
lapse  and  be  written  ofif :  Provided  that  upon  cause  being 
shown  to  the  satisfaction  of  the  Governor  in  Council,  he 
may,  by  order  in  council  to  be  made  before  the  first  day 
of  May  in  each  year,  extend  the  time  for  finally  closing 
the  account  of  any  appropriation,  for  a  period  of  not 
more  than  three  months  from  the  end  of  the  fiscal  year, 
after  the  expiration  of  which  extended  time,  and  not  be- 
fore, the  balance  of  such  appropriation  shall  lapse  and 
be  written  oflf.     6  E.  VII.,  c.  12,  s.  2, 

51.  On  or  before  the  thirtieth  day  of  June  in  every 
year,  accounts  of  the  appropriation  of  the  several  supply 

307 


THE  CANADIAN  BUDGETARY  SYSTEM 

grants  comprised  in  the  Appropriation  Act,  or  in  any 
other  Act,  for  the  year  ending  thirty-first  March  then 
last,  shall  be  prepared  by  the  several  departments  and  be 
transmitted  for  examination  to  the  Auditor  General  and 
to  the  Deputy  Minister  of  Finance,  and,  when  certified 
and  reported  upon,  as  hereinafter  directed,  they  shall  be 
laid  before  the  House  of  Commons;  and  such  accounts 
shall  be  called  the  appropriation  accounts  of  the  moneys 
expended  for  the  services  to  which  they  respectively 
relate. 

2.  Each  of  such  accounts  shall  be  examined  under  the 
direction  of  the  Auditor  General,  by  such  officer  or  clerk 
in  his  office  as  he  directs;  and  such  officer  or  clerk  shall 
certify  to  the  due  examination  of  such  account,  and  the 
Auditor  General  shall  certify  that  the  account  has  been 
examined  under  his  direction  and  is  correct.  51  V.,  c. 
7,  s.  8;  6  E.  Vn.,  c.  12,  ss.  i  and  3. 

52.  The  department  charged  with  the  expenditure  of 
any  vote  under  the  authority  of  the  Governor  in  Council, 
shall  prepare  the  appropriation  account  thereof.  51  V., 
c.  7,  s.  8. 

53.  The  department  charged  with  the  duty  of  pre- 
paring the  appropriation  account  of  a  grant  shall  trans- 
mit to  the  Auditor  General,  together  with  the  annual  ap- 
propriation account  of  such  grant,  a  balance  sheet  so 
prepared  as  to  show  the  debit  and  credit  balances  in  the 
ledger  of  such  department  on  the  day  when  the  said  ap- 
propriation account  was  closed,  and  also  so  prepared  as 
to  verify  the  balances  appearing  upon  the  annual  appro- 
priation account. 

2.  Any  balances  outstanding  in  the  hands  of  any  per- 
son or  persons  unexpended  or  unaccounted  for  at  such 
period  shall  be  accounted  for  and  settled  as  soon  there- 
after as  is  practicable,  but  not  later  than  the  termination 
of  the  next  succeeding  fiscal  year.     51  V.,  c,  7,  s.  8. 

54.  The  Treasury  Board  may  alter  the  time  at  or  to 
which  any  accountant  for  public  moneys,*  public  officer, 
corporation  or  institution,  is  required  to  render  any  ac- 

308 


APPENDICES 

count  or  to  make  any  return,  whenever  in  its  opinion 
such  alteration  will  facilitate  the  correct  preparation  of 
the  public  accounts  or  estimates  for  the  fiscal  year. 
R.S.,  c.  29,  s.  41. 

55.  The  deputy  heads  of  the  several  departments  or 
the  officers,  clerks  or  other  persons  charged  with  the  ex- 
penditure of  public  moneys,  shall  respectively  audit  the 
details  of  the  accounts  of  the  several  services  in  the  first 
instance,  and  be  responsible  for  the  correctness  of  such 
audit.     R.S.,  c.  29,  s.  42. 

56.  Every  appropriation  account,  when  rendered  to 
the  Auditor  General,  shall  be  accompanied  by  an  ex- 
planation showing  how  the  balances  on  the  grants  in- 
cluded in  the  previous  account  have  been  adjusted,  and 
shall  also  contain  an  explanatory  statement  of  any  excess 
of  expenditure  over  the  grants  included  in  such  account ; 
and  such  statement,  as  well  as  the  appropriation  account, 
shall  be  signed  by  the  deputy  head  and  the  accountant,  or 
such  other  duly  authorized  officer  of  such  department 
as  the  Treasury  Board  determines.     51  V,,  c.  7,  s.  9. 

57.  Every  appropriation  account  shall  be  examined 
by  the  Auditor  General  on  behalf  of  the  House  of  Com- 
mons. 

2.  In  the  examination  of  such  accounts,  the  Auditor 
General  shall  ascertain,  first,  whether  the  payments 
which  the  accounting  department  has  charged  to  the 
grant  are  supported  by  the  vouchers  required  by  this  Act 
and  by  proofs  of  payment;  and,  secondly,  whether  the 
money  expended  has  been  applied  to  the  purposes  for 
which  such  grant  was  intended  to  provide :  Provided  that 
whenever  it  appears  to  the  Minister  of  Finance,  that  the 
expenditure  included,  or  to  be  included,  in  any  appropria- 
tion account,  or  any  portion  of  such  expenditure,  calls 
for  further  examination,  he  may  instruct  the  Auditor 
General  to  further  examine  such  expenditure  and  to  re- 
port to  the  Minister  of  Finance  thereon;  and  if  the  Min- 
ister of  Finance  does  not,  thereupon,  see  fit  to  sanction 
such  expenditure,  it  shall  be  regarded  as  being  not 

309 


THE  CANADIAN  BUDGETARY  SYSTEM 

properly  chargeable  to  a  parliamentary  grant,  and  shall 
be  reported  to  the  House  of  Commons,  in  the  manner 
hereinafter  provided.     51  V.,  c.  7,  s.  9. 

58.  The  Auditor  General  shall,  in  order  that  such 
examinations  may,  as  far  as  possible,  proceed  pari  passu 
with  the  cash  transactions  of  the  several  accounting  de- 
partments, have  free  access,  at  all  convenient  times,  to 
the  books  of  account  and  other  documents  relating  to  the 
accounts  of  such  departments,  and  may  require  the  sev- 
eral departments  concerned  to  furnish  him,  from  time  to 
time,  or  at  regular  periods,  with  accounts  of  the  cash 
transactions  of  such  departments  respectively  up  to  such 
times  or  periods.     R.S.,  c.  29,  s.  45. 

59.  In  conducting  the  examination  of  the  vouchers 
relating  to  the  appropriation  of  the  grants  for  the  several 
services  sanctioned  by  the  Appropriation  Act  of  the  year, 
or  by  any  Act  of  Parliament,  the  Auditor  General  shall 
test  the  accuracy  of  the  additions  and  computations  of 
the  several  items  of  such  vouchers. 

2.  If  the  Auditor  General  is  satisfied  that  the  ac- 
counts bear  evidence  that  the  vouchers  have  been  com- 
pletely checked,  examined  and  certified  as  correct  in 
every  respect,  and  that  they  have  been  allowed,  and 
passed  by  the  proper  departmental  officers,  he  may  admit 
the  same  as  satisfactory  evidence  of  payment  in  support 
of  the  charges  to  which  they  relate:  Provided  that,  if 
the  Minister  of  Finance  desires  any  such  vouchers  to  be 
examined  by  the  Auditor  General  in  greater  detail,  the 
Auditor  General  shall  cause  such  vouchers  to  be  sub- 
jected to  such  further  examination  in  detail  as  the 
Minister  of  Finance  thinks  fit  to  prescribe.  R.S,,  c.  29, 
s.  46. 

60.  If,  during  the  process  of  the  examination  by  the 
Auditor  General  hereinbefore  directed,  any  objection 
arises  to  any  item  to  be  introduced  into  the  appropriation 
account  of  any  grant,  such  objection  shall,  notwith- 
standing such  account  has  not  been  rendei*ed  to  him,  be 
immediately  communicated  to  the  department  concerned ; 

310 


APPENDICES 

and,  if  the  objection  is  not  answered  to  his  satisfaction 
by  such  department,  it  shall  be  referred  by  him  to  the 
Treasury  Board,  and  the  Treasury  Board  shall  deter- 
mine in  what  manner  the  items  in  question  shall  be 
entered  in  the  annual  appropriation  account.  R.S.,  c. 
29,  s.  47. 

61.  In  reporting  as  hereinbefore  directed  for  the  in- 
formation of  the  House  of  Commons,  the  result  of  the 
examination  of  the  appropriation  accounts,  the  Auditor 
General  shall  call  attention  to  every  case  in  which, — 

(a)  cheques  have  been  issued  without  his  certificate; 
or, 

(b)  a  grant  has  been  exceeded;  or, 

(c)  money  received  by  a  department  from  other 
sources  than  the  grants  for  the  year  to  which  the 
account  relates  has  not  been  applied  or  accounted 
for  according  to  the  direction  of  Parliament;  or, 

(d)  in  which  a  sum  charged  against  a  grant  is  not 
supported  by  proof  of  payment;  or, 

(e)  a  payment  so  charged  did  not  occur  within  the 
period  of  the  account,  or  was,  for  any  other  reason, 
not  properly  chargeable  against  the  grant,  or  was, 
in  any  way,  irregular,     51  V.,  c.  7,  s.  10. 

62.  If  the  Minister  of  Finance  does  not,  within  the 
time  prescribed  by  this  Act,  present  to  the  House  of 
Commons  any  report  made  by  the  Auditor  General  on 
the  appropriation  accounts,  or  on  any  other  accounts, 
the  Auditor  General  shall  forthwith  present  such  report. 
R.S.,  c.  29,  s.  49. 

63.  Besides  the  appropriation  accounts  of  the  grants 
of  Parliament,  the  Auditor  General  shall  examine  and 
audit,  if  required  so  to  do  by  the  Minister  of  Finance, 
and  in  accordance  with  any  regulations  which  are  pre- 
scribed for  his  guidance  in  that  behalf  by  the  Treasury 
Board, — 

(a)  the  accounts  of  all  receipts  of  revenues  forming^ 
the  Consolidated  Revenue  Fund  of  Canada; 

311 


THE  CANADIAN  BUDGETARY  SYSTEM 

(b)  the  accounts  current  with  the  several  banks  and 
financial  agents  of  Canada ; 

(c)  the  accounts  relating  to  the  issue  or  redemption 
of  loans; 

(d)  the  accounts  with  the  several  Indian  tribes  known 
as  the  Indian  Fund ; 

(e)  the  accounts  with  the  several  provinces  forming 
the  Dominion  of  Canada ; 

(/)  the  accounts  with  the  Government  of  the  United 
Kingdom ;  and, 

(g)  any  other  public  accounts  which,  though  not  re- 
lating directly  to  the  receipts  or  expenditure  of  the 
Dominion  of  Canada,  the  Treasury  Board  directs  him  to 
examine  and  audit.     R.S.,  c.  29,  s.  50. 

64.  Such  accounts  shall  be  rendered  to  the  Auditor 
General  by  the  departments  or  officers  directed  so  to  do 
by  the  Minister  of  Finance.     R.S.,  c.  29,  s.  51. 

65.  Every  public  officer  into  whose  hands  public 
moneys,  either  in  the  nature  of  revenue  or  fees  of  office, 
are  paid  by  persons  bound  by  law  or  regulation  so  to  do, 
or  by  subordinate  or  other  officers  whose  duty  it  is  to  pay 
such  moneys,  wholly,  or  in  part,  into  the  Account  of  the 
Minister  of  Finance  and  Receiver  General,  or  to  apply 
the  same  to  any  public  service,  shall,  at  such  times  and  in 
such  form  as  the  Treasury  Board  determines,  render  an 
account  of  his  receipts  and  payments  to  the  Auditor 
General. 

2.  The  Clerk  of  the  King's  Privy  Council  for  Canada 
shall  inform  the  Auditor  General  of  the  appointment  of 
every  such  officer.     R.S.,  c.  29,  s.  51. 

66.  The  Auditor  General  shall  examine  the  several 
accounts  transmitted  to  him  with  as  little  delay  as  pos- 
sible, and  when  the  examination  of  each  account  is  com- 
pleted he  shall  make  a  statement  thereof  in  such  form  as 
he  deems  fit,  and  if  it  appears  from  the  statement  so 
made  up  of  any  account,  being  an  account  current,  that 
the  balance  thereon  agrees  with  the  accountant's  balance, 
or  if  it  appears  from  any  account  rendered  by  an  ac- 

312 


APPENDICES 

courxtant,  as  well  as  from  the  statement  of  such  account 
by  the  Auditor  General,  that  the  accountant  is  *even  and 
quit/  the  Auditor  General  shall  sign  and  pass  such  state- 
ment of  account  so  made  up  by  him  as  aforesaid. 

2.  In  all  other  cases  the  Auditor  General  after  having 
made  up  the  statement  of  account  as  hereinbefore 
directed,  shall  transmit  the  same  to  the  Minister  of 
Finance,  who,  having  considered  such  statement,  shall 
return  it,  with  his  certificate  attached  thereto,  to  the 
Auditor  General,  directing  him  to  sign  and  pass  the  ac- 
count, either  conformably  to  the  statement  thereof,  or 
with  such  alterations  as  he  deems  just  and  reasonable; 
and  a  statement  of  the  account  made  up  by  the  Auditor 
General  in  accordance  with  such  certificate  from  the 
Minister  of  Finance,  shall  then  be  signed  and  passed  by 
the  Auditor  General. 

3.  A  list  of  all  accounts  which  the  Auditor  General 
has  signed  and  passed,  which  list  shall  be  so  prepared  as 
to  show  thereon  the  charge,  discharge  and  balance  of 
each  accountant  respectively,  shall  be  submitted  by  him 
to  the  Treasury  Board  twice  in  every  year,  that  is  to  say, 
not  later  than  the  first  week  of  February,  and  the  first 
week  of  August.     R.S.,  c.  29,  s.  52. 

67.  As  soon  as  any  account  has  been  signed  and 
passed  by  the  Auditor  General,  he  shall  transmit  to  the 
accountant  a  certificate,  in  which  the  total  amounts  of 
the  sums  forming,  respectively,  the  charge  and  discharge 
of  such  account,  and  the  balance,  if  any,  remaining  due 
to  or  by  such  accountant  shall  be  set  forth;  and  every 
such  certificate  shall  be  signed  by  him  and  shall  be  valid 
and  effectual  to  discharge  the  accountant,  as  the  case 
may  be,  either  wholly  or  from  so  much  of  the  amount 
with  which  he  was  chargeable,  as  he  appears  by  such 
certificate  to  be  discharged  from:  Provided  that  when 
any  account,  not  being  an  account  current,  has  been 
signed  and  passed  by  the  Auditor  General  with  a  balance 
due  thereon  to  the  Crown,  he  shall  not  make  out  or  grant 
any  such  certificate  as  aforesaid  until  the  accountant 

313 


THE  CANADIAN  BUDGETARY  SYSTEM 

satisfies  him,  either  that  he  has  discharged  the  full 
amount  of  such  balance,  and  any  interest  which  is,  as 
hereinafter  provided,  payable  thereon,  or  that  he  has 
been  relieved  from  the  payment  thereof,  or  of  so  much 
therof  as  has  not  been  paid,  by  an  order  in  council  passed 
on  a  report  from  the  Treasury  Board.     R.S.,  c.  29,  s.  53. 

68.  Whenever  the  Auditor  General  is  required  by  the 
Minister  of  Finance  to  examine  and  audit  the  accounts 
of  the  receipt,  expenditure,  sale,  transfer  or  delivery  of 
any  securities,  stamps,  Canadian  or  other  Government 
stock  or  annuities,  provisions  or  stores,  the  property  of 
His  Majesty,  he  shall,  after  the  examination  of  such  ac- 
counts has  been  completed,  transmit  a  statement  thereof, 
or  a  report  thereon  to  the  Minister  of  Finance,  who  shall, 
if  he  thinks  fit,  signify  his  approval  of  such  accounts. 

2.  The  Auditor  General,  on  receipt  of  such  approval 
shall  transmit  to  the  accountant  a  certificate  in  a  form  to 
be,  from  time  to  time,  determined  by  the  Auditor  Gen- 
eral, which  shall  be  to  such  accountant  a  valid  and 
effectual  discharge  from  so  much  as  he  thereby  appears 
to  be  discharged  from.     R.S.,  c.  29,  s.  54. 

69.  Whenever  an  accountant  is  dissatisfied  with  any 
disallowance  or  charge  in  his  accounts  m.ade  by  the 
Auditor  General,  such  accountant  may  appeal  to  the 
Treasury  Board,  which,  after  such  further  investiga- 
tions as  it  considers  equitable,  whether  by  viva  voce  ex- 
amination or  otherwise,  may  make  such  order,  directing 
the  relief  of  the  appellant,  wholly  or  in  part,  from  the  dis- 
allowance or  charge  in  question,  as  appears  to  it  to  be 
just  and  reasonable;  and  the  Auditor  General  shall 
govern  himself  accordingly.     R.S.,  c.  29,  s.  76. 

70.  Every  accountant,  on  the  termination  of  his 
charge  as  such  accountant,  or,  in  the  case  of  a  deceased 
accountant,  his  representatives,  shall,  forthwith,  pay 
over  any  balance  of  public  money  then  due  to  the  Crown 
in  respect  of  such  charge,  to  the  public  officer  authorized 
to  receive  the  same. 

2.    Whenever  it  appears  to  the  Auditor  General  that 

314 


APPENDICES 

balances  of  public  money  have  been  improperly  and  un- 
necessarily retained  by  an  accountant,  he  shall  report 
the  circumstances  of  such  cases  to  the  Minister  of 
Finance,  who  shall  take  such  measures  as  to  him  seem 
expedient  for  the  recovery,  by  legal  process  or  by  other 
lawful  ways  and  means,  of  the  amount  of  such  balance 
or  balances,  together  with  interest  upon  the  whole  or 
upon  such  part  of  such  balance  or  balances,  for  such 
period  of  time  and  at  such  rate  as  to  the  Minister  of 
Finance  appears  just  and  reasonable.     R.S.,  c.  29,  s.  59. 

INQUIRIES  BY  THE  AUDITOR  GENERAL 

71.  The  Auditor  General  may  examine  any  person  on 
oath  or  affirmation  on  any  matter  pertinent  to  any  ac- 
count submitted  to  him  for  audit;  and  such  oath  or 
affirmation  may  be  administered  by  him  to  any  person 
whom  he  desires  to  examine.     R.S.,  c.  29,  s.  55. 

y2.  The  Auditor  General  may  apply  to  any  judge  of 
the  Exchequer  Court  of  Canada,  or  to  any  judge  of  a 
superior  court  of  any  province  of  Canada,  for  an  order 
that  a  subpoena  be  issued  from  the  court,  commanding 
any  person  therein  named  to  appear  before  him  at  the 
time  and  place  mentioned  in  such  subpoena,  and  then  and 
there  to  testify  to  all  matters  within  his  knowledge 
relative  to  any  account  submitted  to  him,  and,  if  so  re- 
quired, to  bring  with  him  and  produce  any  document, 
paper  or  thing  which  he  has  in  his  possession  relative  to 
any  such  account  as  aforesaid;  and  such  subpoena  shall 
issue  accordingly  upon  the  order  of  such  judge. 

2.  Any  such  w^itness  may  be  summoned  from  any  part 
of  Canada  whether  within  or  without  the  ordinary  juris- 
diction of  the  court  issuing  the  subpoena. 

3.  Reasonable  travelling  expenses  shall  be  tendered  to 
any  witness  so  subpoenaed  at  the  time  of  such  service. 
R.S.,  c.  29,  s.  56. 

73.  If,  by  reason  of  the  distance  at  which  any  person, 
whose  evidence  is  required  by  the  Auditor  General, 
resides  from  the  seat  of  government,  or  for  any  other 

315 


THE  CANADIAN  BUDGETARY  SYSTEM 

cause,  the  Auditor  General  deems  it  advisable,  he  may 
issue  a  commission,  under  his  hand  and  seal,  to  any  of- 
ficer or  person  therein  named,  empowering  him  to  take 
such  evidence,  and  report  the  same  to  him. 

2.  Such  officer  or  person,  being  first  sworn  before 
some  justice  of  the  peace  faithfully  to  execute  the  duty 
entrusted  to  him  by  such  commission,  shall,  with  regard 
to  such  evidence,  have  the  same  powers  as  the  Auditor 
General  would  have  had  if  such  evidence  had  been  taken 
before  him,  and  may,  in  like  manner,  apply  to  and  obtain 
from  any  judge  of  any  of  the  courts  aforesaid,  a  sub- 
poena for  the  purpose  of  compelling  the  attendance  of 
any  person,  or  the  production  of  any  document,  paper  or 
thing  before  him ;  and  such  subpoena  shall  issue  accord- 
ingly on  the  order  of  such  judge :  or  such  subpoena  may 
issue  on  the  application  of  the  Auditor  General  to  compel 
such  attendance,  or  the  production  of  any  document, 
paper  or  thing  before  such  commissioner.  R.S.,  c.  29,  s.  57. 

74.  Every  person  summoned,  in  the  manner  herein- 
before provided,  to  attend  before  the  Auditor  General  or 
any  commissioner  appointed  as  aforesaid,  who  fails, 
without  valid  excuse,  to  attend  accordingly,  or,  being 
commanded  to  produce  any  document,  paper  or  thing  in 
his  possession,  fails  to  produce  the  same,  or  refuses  to  be 
sworn  or  to  answer  any  lawful  and  pertinent  question  put 
to  him  by  the  Auditor  General  or  by  such  commissioner, 
shall,  for  each  such  failure  or  refusal,  forfeit  the  sum  of 
one  hundred  dollars  to  the  Crown,  for  the  public  uses  of 
Canada,  to  be  recovered  in  any  manner  in  which  debts 
due  to  the  Crown  are  recoverable ;  and  such  person  may 
likewise  be  dealt  with  by  the  court  out  of  which  the  sub- 
poena issued,  as  a  person  who  has  refused  to  obey  the 
process  of  such  court,  and  who  is  guilty  of  a  contempt 
thereof.     R.S.,  c.  29,  s.  58. 

LIABILITY   CIVILLY 

75.  Every  officer  or  person  w^ho  refuses  or  neglects 
to  transmit  any  account,  statement  or  return,  with  the 

316 


APPENDICES 

proper  vouchers,  to  the  officer  or  department  to  whom  he 
is  lawfully  required  to  transmit  the  same,  on  or  before 
the  day  appointed  for  the  transmission  thereof,  shall,  for 
such  refusal  or  neglect,  forfeit  and  pay  to  the  Crown, 
for  the  uses  of  Canada,  the  sum  of  one  hundred  dollars, 
recoverable  with  costs,  as  a  debt  due  to  the  Crown,  and 
in  any  court  and  in  any  way  in  which  debts  to  the  Crown 
are  recoverable. 

2.  In  any  action  for  the  recovery  of  such  sum,  it  shall 
be  sufficient  to  prove,  that  such  account,  statement  or  re- 
turn ought  to  have  been  transmitted  by  the  defendant, 
as  alleged  on  the  part  of  the  Crown ;  and  the  burden  of 
proof  that  the  same  was  so  transmitted  shall  rest  upon 
the  defendant.     R.S.,  c.  29,  s.  60. 

76.  Whenever  the  Minister  of  Finance  has  reason  to 
believe  that  any  officer  or  person  has  received  money  for 
the  Crown,  or  for  which  he  is  accountable  to  the  Crown, 
or  has  in  his  hands  any  public  money  applicable  to  any 
purpose,  and  has  not  paid  over  or  duly  applied  and  ac- 
counted for  the  same,  he  may  direct  a  notice  to  such 
officer  or  person,  or  to  his  representatives  in  case  of  his 
death,  requiring  him  or  them,  within  a  time  from  the 
service  of  such  notice,  to  be  therein  named,  to  pay  over, 
or  apply  and  account  for  such  money  to  the  Minister  of 
Finance  or  to  the  officer  mentioned  in  the  notice,  and  to 
transmit  to  him  the  proper  vouchers  that  he  or  they  have 
so  done.     R.S.,  c.  29,  s.  61. 

'^7.  If  any  officer  or  person  fails  to  pay  over,  apply  or 
account  for  any  such  money,  and  to  transmit  such 
vouchers  as  aforesaid  within  the  time  limited  by  the 
notice  served  on  him,  the  Minister  of  Finance  shall  state 
an  account  as  between  such  officer  or  person  and  the 
Crown  in  the  matter  to  which  the  notice  relates, 
charging  interest  from  the  service  thereof,  and  shall  de- 
liver a  copy  thereof  to  the  Attorney  General  of  Canada. 

2.  Such  copy  shall  be  sufficient  evidence  to  support 
any  information  or  other  proceedings  for  the  recovery 
of  the  amount  therein  shown  to  be  in  the  hands  of  the 

317 


THE  CANADIAN  BUDGETARY  SYSTEM 

defendant,  as  a  debt  due  to  the  Crown,  saving  to  the  de- 
fendant the  right  to  plead  and  give  in  evidence  all  such 
matters  as  are  legal  and  proper  for  his  defence. 

3.  The  defendant  shall  be  liable  for  the  costs  of  such 
information  or  proceeding,  whatever  the  judgment 
therein  is,  unless, — 

(a)  he  proves  that,  before  the  time  limited  in  such 
notice,  he  paid  over  or  applied  and  duly  accounted 
for  the  money  therein  mentioned,  and  transmitted 
the  proper  vouchers  with  such  account ;  or, 

(b)  he  is  sued  for  such  money  in  a  representative 
character,  and  is  not  personally  liable  therefor,  or 
to  render  such  account.     R.S.,  c.  29,  s.  62. 

78.  Whenever  any  such  officer  or  person  as  aforesaid 
has  transmitted  an  account,  either  before  or  after  notice 
as  aforesaid,  but  without  vouchers  or  with  insufficient 
vouchers,  for  any  sum  for  which  he  therein  takes  credit, 
the  Minister  of  Finance  may  direct  a  notice  to  such 
officer  or  person,  requiring  him  to  transmit  such 
vouchers  or  sufficient  vouchers,  as  are  stated  in  the 
notice,  within  such  time  after  the  service  of  the  notice 
as  the  Minister  of  Finance  deems  fit;  and  if  such 
vouchers  are  not  transmitted  within  that  time,  the  Min- 
ister of  Finance  may  state  an  account  against  such  officer 
or  person,  disregarding  the  sums  for  which  he  has  taken 
credit,  but  for  which  he  has  transmitted  no  vouchers  or 
insufficient  vouchers,  and  may  deliver  a  copy  of  such 
account  to  the  Attorney  General  of  Canada. 

2.  Such  copy  shall  be  sufficient  evidence  to  support  an 
information  or  other  proceeding  for  the  recovery  of  the 
amount  therein  shown  to  be  in  the  hands  of  the  de- 
fendant, saving  to  the  defendant  the  right  to  plead  and 
give  in  evidence  all  such  matters  as  are  legal  and  proper 
for  his  defence. 

3.  Such  defendant  shall  be  liable  for  the  costs  of  the 
information  or  proceeding,  whatever  the  judgment 
therein  is,  unless  the  vouchers  by  him  transmitted  within 
the  time  limited  by  the  notice  served  on  him,  or  before 

318 


APPENDICES 

such  service,  are  found  of  themselves  sufficient  for  his 
defence,  and  for  his  discharge  from  all  sums  demanded 
of  him.     R.S.,  c.  29,  s.  63. 

79.  If,  at  any  time,  it  clearly  appears  by  the  books  or 
accounts  kept  by  or  in  the  office  of  any  officer  or  person 
employed  in  the  collection  or  management  of  the  revenue, 
or  in  accounting  for  the  same,  or  by  his  written  acknowl- 
edgement or  confession,  that  such  officer  or  person  has, 
by  virtue  of  his  office  or  employment,  received  moneys 
belonging  to  His  Majesty  and  amounting  to  a  sum  cer- 
tain, which  he  has  refused  or  neglected  to  pay  over,  in 
the  manner  and  at  the  time  lawfully  appointed,  to  the 
officer  duly  appointed  to  receive  the  same,  a  justice  or 
judge  of  any  court  having  jurisdiction  in  civil  matters  to 
the  amount  of  the  sums  so  ascertained  as  aforesaid,  shall, 
upon  affidavit  of  the  facts  made  before  him  by  any  officer 
cognizant  thereof  and  thereunto  authorized  by  the 
Governor  in  Council,  cause  to  be  issued  against  and  for 
the  seizure  and  sale  of  the  goods,  chattels  and  lands  of 
the  officer  or  person  so  in  default  as  aforesaid,  such  writ 
or  writs  as  might  have  issued  out  of  such  court,  if  the 
bond  given  by  him  had  been  put  in  suit,  and  judgment 
had  been  thereupon  obtained  in  favour  of  His  Majesty, 
for  a  like  sum,  and  any  delay  by  law  allowed  between 
judgment  and  execution  had  expired. 

2.  Such  writ  or  writs  shall  be  executed  by  the  sheriff 
or  other  proper  officer ;  and  such  sum  as  aforesaid  shall 
be  levied  under  them  with  costs,  and  all  further  pro- 
ceedings shall  be  had,  as  if  such  judgment  as  aforesaid 
had  been  actually  obtained.     R.S.,  c.  29,  s.  64. 

80.  Whenever  any  estate  belonging  to  a  public  ac- 
countant is  sold  under  any  writ  of  extent  or  any  decree 
or  order  of  any  court  of  record,  and  the  purchaser 
thereof,  or  of  any  part  thereof,  has  paid  his  purchase 
money  into  the  hands  of  any  public  accountant  author- 
ized to  receive  the  same,  such  purchaser  shall  be  wholly 
exonerated  and  discharged  from  all  further  claims  of 
His  Majesty,  for  or  in  respect  of  any  debt  arising  upon 

319 


THE  CANADIAN  BUDGETARY  SYSTEM 

the  account  of  such  accountant,  although  the  purchase 
money  so  paid  is  not  sufficient  in  amount  to  discharge 
the  whole  of  such  debt.     R.S.,  c.  29,  s.  65. 

81.  If  any  officer  or  person  has  received  public  money 
for  the  purpose  of  applying  it  to  any  specific  purpose, 
and  has  not  so  applied  it  within  the  time  or  in  the  manner 
provided  by  law,  or  if  any  person  having  held  any  public 
office  and  having  ceased  to  hold  the  same,  has  in  his 
hands  any  public  money  received  by  him  as  such  officer 
for  the  purpose  of  being  applied  to  any  specific  purpose 
to  which  he  has  not  so  applied  it,  such  officer  or  person 
shall  be  deemed  to  have  received  such  money  for  the 
Crown  for  the  public  uses  of  Canada,  and  may  be  notified 
by  the  Treasury  Board  to  pay  such  sum  back  to  the 
Minister  of  Finance;  and  the  same  may  be  recovered 
from  him  as  a  debt  due  to  the  Crown,  in  any  manner  in 
which  debts  due  to  the  Crown  are  recoverable,  and  an 
equal  sum  may,  in  the  meantime,  be  applied  to  the  pur- 
pose to  which  such  sum  ought  to  have  been  applied. 
R.S.,  c.  29,  s.  66. 

82.  If,  by  reason  of  any  malfeasance,  or  of  any  gross 
carelessness  or  neglect  of  duty,  by  any  officer  or  person 
employed  in  the  collection  or  management  of  the  revenue 
or  in  collecting  or  receiving  any  moneys  belonging  to  the 
Crown,  for  the  public  uses  of  Canada,  any  sum  of  money 
is  lost  to  the  Crown,  such  officer  or  person  shall  be  ac- 
countable for  such  sum  as  if  he  had  collected  and  received 
the  same,  and  it  may  be  recovered  from  him  on  proof  of 
such  malfeasance,  gross  carelessness  or  neglect,  in  like 
manner  as  if  he  had  so  collected  and  received  it.  R.S., 
c.  29,  s.  67. 

83.  Nothing  in  this  Act  shall  weaken  or  impair  any 
remedy  which  the  Crown  has  for  recovering  or  enforcing 
the  payment  or  delivering  of  any  money  or  property  be- 
longing to  the  Crown,  for  the  public  uses  of  Canada,  and 
in  the  possession  of  any  officer  or  person  whomsoever,  by 
virtue  of  any  other  Act  of  law.     R.S.,  c.  29,  s.  68. 

320 


APPENDICES 


OFFENCES  AND  PENALTIES 


84.  Every  officer,  or  person  acting  in  any  office  or 
employment,  connected  with  the  collection  or  manage- 
ment of  the  revenue  who, — 

(a)  receives  any  compensation  or  reward  for  the  per- 
formance of  any  official  duty,  except  as  by  law  pre- 
scribed ;  or, 

(b)  conspires  or  colludes  with  any  other  person  to  de- 
fraud the  Crown,  or  makes  opportunity  for  any 
person  to  defraud  the  Crown ;  or, 

(c)  designedly  permits  any  violation  of  the  law  by 
any  other  person;  or, 

(d)  wilfully  makes  or  signs  any  false  entry  in  any 
book,  or  wilfully  makes  or  signs  any  false  certificate 
or  return  in  any  case,  in  which  it  is  his  duty  to  make 
an  entry,  certificate  or  return ;  or, 

(e)  having  knowledge  or  information  of  the  violation 
of  any  revenue  law  by  any  person,  or  of  fraud  com- 
mitted by  any  person  against  the  Crown,  under  any 
revenue  law  of  Canada,  fails  to  report  in  writing, 
such  knowledge  or  information  to  his  next  superior 
officer;  or, 

(f)  demands  or  accepts  or  attempts  to  collect,  directly 
or  indirectly  as  payment  or  gift  or  otherwise,  any 
sum  of  money,  or  other  thing  of  value,  for  the  com- 
promise, adjustment  or  settlement  of  any  charge  or 
complaint  for  any  violation  or  alleged  violation  of 
law,  except  as  expressly  authorized  to  do  by  law,  or 
by  the  authority  of  the  department  of  which  he  is  an 
officer ; 

shall  be  dismissed  from  office,  and  is  guilty  of  an  in- 
dictable ofifence,  and  shall,  on  conviction,  be  liable  to  a 
fine  not  exceeding  five  hundred  dollars,  and  to  imprison- 
ment for  any  term  not  exceeding  one  year.  R.S.,  c. 
29,  s.  69. 

85,  (a)  Every  person  who  directly  or  indirectly, 
promises,  offers  or  gives,  or  causes  or  procures  to  be 

321 


THE  CANADIAN  BUDGETARY  SYSTEM 

promised,  offered  or  given  any  money,  goods,  chose 
in  action,  bribe,  present  or  reward,  or  any  promise, 
contract,  undertaking,  obligation  or  security  for  the 
payment  or  delivery  of  any  money,  goods,  chose  in 
action,  bribe,  present  or  reward,  or  an>  other  valu- 
able thing  whatsoever,  to  any  officer,  or  any  person 
acting  in  any  office  or  employment  connected  with 
the  collection  or  management  of  the  revenue,  with 
intent, — 

(i)  to   influence  his   decision   or   action   on   any 
question  or  matter  which  is  then  pending,  or  may, 
by  law,  be  brought  before  him  in  his  official 
capacity ;  or, 
(ii)  to  influence  such  officer  or  person  to  commit, 
or  aid  or  abet  in  committing  any  fraud  on  the 
revenue,  or  to  connive  at,  collude  in,  or  allow  or 
permit  any  opportunity  for  the  commission  of  any 
such  fraud ;  and, 
(b)    Every  officer  or  person  who  in  any  wise  accepts 
or  receives  any  such  moneys,  goods,  chose  in  action, 
bribe,  present,  or  reward,  or  any  promise,  contract, 
undertaking,  obligation  or  security  for  the  pay- 
ment or  delivery  thereof,  or  any  other  valuable 
thing  whatever,  or  any  part  of  the  same  respec- 
tively ; 
is  guilty  of  an  indictable  offence,  and  liable,  on  convic- 
tion, to  a  fine  not  exceeding  three  times  the  amount  so 
offered  or  accepted,  and  to  imprisonment  for  any  term 
not  exceeding  one  year. 

2.  Every  officer  or  person  who  holds  any  office  or 
place  under  the  Crown,  and  is  convicted  under  this  sec- 
tion, shall  forfeit  his  office  or  place;  and  every  person 
who  is  convicted  under  this  section  shall  be  for  ever  dis- 
qualified to  hold  any  office  of  trust,  honour  or  profit 
under  the  Crown.     R.S.,  c.  29,  s.  70. 

86.  Every  officer  and  every  person  acting  in  any 
office  or  employment  connected  v/ith  the  collection  of  the 
revenue  who  is  or  becomes,  directly  or  indirectly,  in- 

322 


APPENDICES 

terested  in  the  manufacture  or  production  of  any  article 
subject  to  excise,  or  who  trades  in  any  article  subject 
to  excise  duties,  shall  incur  a  penalty  not  exceeding  five 
hundred  dollars  and  not  less  than  fifty  dollars,  which 
shall  be  recoverable  in  any  court  of  competent  jurisdic- 
tion.    R.S.,  c.  29,  s.  71. 

87.  Nothing  herein  contained  shall  prevent,  lessen,  or 
impair  any  remedy  which  His  Majesty  or  any  other  per- 
son has  against  any  person  ofifending  against  this  Act, 
or  his  sureties,  or  against  any  other  person  whomsoever; 
but  nevertheless  the  conviction  of  any  such  oflfender  shall 
not  be  received  in  evidence  in  any  suit,  or  action  at  law 
or  in  equity,  against  him.     R.S.,  c.  29,  s.  72. 

BOOKS,  PAPERS,  ETC. 

88.  All  books,  papers,  accounts  and  documents  of 
what  kind  soever,  and  by  whom  and  at  whose  cost  soever 
the  paper  and  materials  thereof  have  been  procured  or 
furnished,  kept  or  used  by,  or  received  or  taken  into  the 
possession  of  any  officer  or  person  employed  or  having 
been  employed  in  the  collection  or  management  of  the 
revenue  or  in  accounting  for  the  same,  by  virtue  of  his 
employment  as  such,  shall  be  deemed  to  be  chattels  be- 
longing to  His  Majesty;  and  all  moneys  or  valuable 
securities  received  or  taken  into  the  possession  of  any 
such  officer  or  person  by  virtue  of  his  employm*ent  shall 
be  deemed  to  be  moneys  and  valuable  securities  belong- 
ing to  His  Majesty.     R.S.,  c.  29,  s.  73. 

OATHS  AND  DECLARATIONS 

89.  Whenever  proof  on  oath  or  by  affirmation  or 
declaration  is  required  by  any  law  relating  to  the  col- 
lection or  management  of  the  revenue  or  the  accounting 
for  the  same,  or  is  necessary  for  the  satisfaction  or  con- 
sideration of  the  Governor  in  Council,  and  no  officer  or 
person  is  specially  named  before  whom  such  proof  is  to 
be  made,  such  proof  may  be  made  before  any  collector 
or  chief  officer  of  the  Customs  for  the  port  or  place  where 
the  same  is  required,  or  before  any  person  acting  for  any 

323 


THE  CANADIAN  BUDGETARY  SYSTEM 

such  collector  or  chief  officer,  or  before  such  other  officer 
or  person  as  is  appointed  by  the  Governor  in  Council  in 
that  behalf,  who  shall  administer  such  oath  or  affirma- 
tion or  receive  such  declaration. 

2.  In  any  case  or  class  of  cases  where  an  oath  is  re- 
quired by  this  Act,  or  by  any  law  in  force,  in  any  mat- 
ter relating  to  the  collection  or  management  of  the 
revenue  or  the  accounting  for  the  same,  the  Governor  in 
Council  may  authorize  the  substitution  for  such  oath,  of 
a  solemn  affirmation  or  of  a  declaration,  which  shall 
then  avail  to  all  intents  and  purposes  as  such  oath  would 
have  done.     R.S.,  c.  29,  s.  74. 

90.  Upon  all  examinations  and  inquiries  made  by  any 
officer  or  person  under  order  of  the  Governor  in  Council 
for  ascertaining  the  truth  as  to  any  fact,  relative  to  any 
matter  concerning  the  collection  or  management  of  the 
revenue  or  the  accounting  for  the  same,  or  the  conduct 
of  officers  or  persons  employed  therein,  and  upon  like 
examinations  and  inquiries  made  by  the  collector  of  Cus- 
toms, or  by  the  chief  officer  employed  in  the  collection 
and  management  of  the  revenue,  in  or  at  any  port,  dis- 
trict or  place,  any  person  to  be  examined  as  a  witness 
shall  deliver  his  testimony  on  oath;  and  such  oath  shall 
be  administered  to  him  by  the  officer  or  person  making 
the  examination  or  inquiry.     R.S.,  c.  29,  s.  75. 

HOLIDAYS 

91.  No  day  shall  be  kept  as  a  public  holiday  by  the 
officers  and  persons  employed  in  the  collection  and  man- 
agement of  the  revenue,  except  Christmas  day,  New^ 
Year's  day  and  Good  Friday  in  every  year,  any  day  ap- 
pointed by  proclamation  of  the  Governor  General  for  the 
purpose  of  a  general  fast,  or  of  a  general  thanksgiving, 
such  days  as  are  appointed  for  the  celebration  of  the 
birthday  of  His  Majesty  and  His  Royal  successors,  and 
any  other  statutory  holiday,  and  such  other  days  as  are, 
from  time  to  time,  appointed  as  holidays  by  the  Governor 
in  Council.     R.S.,  c.  29,  s.  yy, 

324 


APPENDICES 

REMISSION  OF  DUTIES  AND  FORFEITURES 

92.  The  Governor  in  Council,  whenever  he  deems  it 
right  and  conducive  to  the  pubHc  good,  may  remit  any 
duty  or  toll  payable  to  His  Majesty,  imposed  or  author- 
ized to  be  imposed  by  any  Act  of  the  Parliament  of 
Canada,  or  by  any  Act  or  Ordinance  of  the  legislature 
of  the  late  province  of  Canada,  or  of  any  of  the  provinces 
of  Nova  Scotia,  New  Brunswick,  British  Columbia  or 
Prince  Edward  Island,  in  force  in  Canada,  and  relating 
to  any  matter  within  the  scope  of  the  powers  of  the 
Parliament  thereof,  or  any  forfeiture  or  pecuniary  pen- 
alty imposed  or  authorized  to  be  imposed  by  any  Act  or 
Ordinance  for  any  contravention  of  the  laws  relating  to 
the  collection  of  the  revenue,  or  to  the  management  of 
any  public  work  producing  toll  or  revenue,  although  any 
part  of  such  forfeiture  or  penalty  is  given  by  law  to  the 
informer  or  prosecutor,  or  to  any  other  person :  Provided 
that  no  duties  of  Customs  or  excise,  paid  to  His  Majesty 
on  any  goods,  shall  be  remitted  or  refunded  on  account 
of  such  goods  having,  after  the  payment  of  such  duties, 
been  lost  or  destroyed  by  fire  or  other  unavoidable  ac- 
cident. 

2.  Such  remission  may  be  total  or  partial,  conditional 
or  unconditional,  and  may  be  granted  either  before  or 
after,  or  pending  any  suit  or  proceeding  for  the  recovery 
of  any  duty,  toll,  penalty  or  forfeiture,  and  either  before 
or  after  any  payment  thereof  has  been  made  or  enforced 
by  process  or  execution;  and  such  remission  may  be 
exercised  by  forbearance  from  instituting  any  suit  or 
proceeding  for  the  recovery  of  any  duty,  toll,  penalty  or 
forfeiture,  or,  if  the  same  has  been  already  instituted, 
then  by  the  delay,  stay  or  discontinuance  of  any  such 
suit  or  proceeding,  or  by  the  forbearance  to  enforce,  or 
by  the  stay  or  abandonment  of  any  execution  or  process 
upon  any  judgment,  or  by  the  entry  of  satisfaction  upon 
any  judgment,  or  by  the  refund  of  any  sum  of  money 
paid  to  the  Minister  of  Finance  for  such  duty,  toll, 

325 


TOE  CANADIxKN  BUDGETARY  SYSTEM 

penalty  or  forfeiture,  or  whereof  payment  has  been  en- 
forced by  any  execution  or  process  upon  any  judgment 
as  aforesaid. 

3.  If  the  remission  is  conditional,  the  condition,  if  ac- 
cepted by  the  person  to  whom  the  remission  is  accorded, 
shall  be  lawful  and  valid,  and  the  performance  thereof, 
or  the  remission  only,  if  unconditional,  shall  have  the 
same  effect  as  if  the  remission  had  been  made  after  the 
duty,  toll,  penalty  or  forfeiture  had  been  sued  for  and 
recovered;  and  if  the  condition  is  not  performed,  it  may 
be  enforced,  or  all  proceedings  may  be  had  as  if  there 
had  been  no  remission. 

4.  No  remission  shall  be  made  in  any  case  unless  such 
case  has  been  considered,  and  the. remission,  whether 
total  or  partial,  conditional  or  unconditional,  has  been 
recommended  by  the  Treasury  Board,  and  sanctioned 
and  ordered  by  the  Governor  in  Council. 

5.  A  detailed  statement  of  all  remissions  and  refunds 
of  any  tolls  or  duties  shall  be  annually  submitted  to  both 
Houses  of  Parliament,  within  the  first  fifteen  days  of 
the  session  thereof  next  following  the  close  of  the  last 
preceding  financial  year.     R.S.,  c.  29,  s.  78. 

93.  If  the  Governor  in  Council  directs  that  the  whole 
or  any  part  of  any  penalty  imposed  by  law  relating  to 
the  revenue  be  remitted  or  returned  to  the  offender,  such 
remission  or  return  shall  have  the  effect  of  a  pardon  for 
the  offence  for  which  the  penalty  is  incurred,  which  shall 
thereafter  have  no  legal  effect  prejudicial  to  the  person 
to  whom  such  remission  is  granted.     R.S.,  c.  29,  s.  79. 

PROCEDURE 

94.  The  Attorney  General  of  Canada  may  sue  for  and 
recover  in  His  Majesty's  name  any  penalty,  or  enforce 
any  forfeiture  imposed  by  any  law  relating  to  the 
revenue,  before  any  court  or  other  judicial  authority  be- 
fore which  such  penalty  or  forfeiture  is  recoverable  or 
enforceable  under  such  law,  or  may  direct  the  discon- 
tinuance of  any  suit  in  respect  of  any  such  penalty  or 

326 


APPENDICES 

forfeiture  by  whom  or  in  whose  name  soever  the  same 
has  been  brought. 

2.  The  whole  of  the  penalty  or  forfeiture  when  re- 
covered or  enforced,  shall  belong  to  His  Majesty  for  the 
public  uses  of  Canada:  Provided  that  the  Governor  in 
Council  may,  if  he  sees  fit,  allow  any  portion  thereof  to 
the  seizing  officer  or  other  person  by  whose  information 
or  aid  the  penalty  or  forfeiture  has  been  recovered  or 
enforced.     R.S.,  c.  29,  s.  80. 

95.  Every  action  and  prosecution  against  any  officer 
or  person  acting  in  any  office  or  employment  connected 
with  the  collection  of  the  revenue  for  any  thing  purport- 
ing to  be  done  in  pursuance  of  any  Act  relating  to  the 
collection  of  the  revenue,  shall,  unless  otherwise  pro- 
vided, be  laid  and  tried  in  the  district,  county  or  other 
judicial  division  where  the  act  was  committed,  and  not 
elsewhere,  and  shall  not  be  commenced  except  within 
six  months  next  after  the  act  committed. 

2.  Notice  in  writing  of  such  action  and  of  the  cause 
thereof  shall  be  given  to  the  defendant  one  month  at 
least  before  the  commencement  of  the  action. 

3.  In  any  such  action  the  defendant  may  plead  the 
general  issue,  and  give  the  provisions  of  this  section  and 
the  special  matter  in  evidence  at  the  trial. 

4.  No  plaintifif  shall  recover  in  any  such  action  if 
tender  of  sufficient  amends  is  made  before  action 
brought,  or  if  a  sufficient  sum  of  money  is  paid  into 
court  by  or  on  behalf  of  the  defendant  after  action 
brought. 

5.  If  such  action  is  commenced  after  the  time  hereby 
limited  for  bringing  it,  or  is  brought  or  the  venue  is  laid 
in  any  other  place  than  as  aforesaid,  a  verdict  shall  be 
found  or  judgment  shall  be  given  for  the  defendant;  and 
thereupon,  or  if  the  plaintiff  becomes  non-suit,  or  dis- 
continues any  such  action  after  issue  joined,  or  if  upon 
demurrer  or  otherwise  judgment  is  given  against  the 
plaintiff,  the  defendant  shall  recover  his  full  costs  as  be- 

327 


THE  CANADIAN  BUDGETARY  SYSTEM 

tween  solicitor  and  client,  and  shall  have  the  like  remedy 
therefor  as  any  defendant  has  by  law  in  other  cases. 

6.  Although  a  verdict  or  judgment  is  given  for  the 
plaintiff  in  any  such  action,  the  plaintiff  shall  not  be 
entitled  to  more  than  twenty  cents  damage,  and  shall  not 
have  costs  against  the  defendant,  if  the  judge  before 
whom  the  trial  is  had  certifies  that  the  defendant  had 
probable  cause. 

7.  If,  on  any  information  or  suit  on  account  of  any 
seizure  made  by  any  such  officer  or  person,  judgment  is 
given  for  the  claimant,  and  the  court  or  judge  certifies 
that  there  was  probable  cause  for  the  seizure,  the  claim- 
ant shall  not  be  entitled  to  costs,  and  the  person  who 
made  the  seizure  shall  not  be  liable  to  any  indictment, 
prosecution  or  suit  on  account  thereof. 

8.  Nothing  herein  shall  prevent  the  effect  of  any  Act 
for  the  protection  of  officers  from  vexatious  actions  for 
things  purporting  to  be  done  in  the  performance  of  their 
duty.     57-58  v.,  c.  19,  s.  I. 


3^ 


APPENDIX  3 

THE  APPROPRIATION  ACT,  NO.  i,  1917 

ACTS  7-8  GEORGE  V. 

CHAPTER  I 

An  Act  for  granting  to  His  Majesty  certain  sums  of 
money  for  the  public  service  of  the  financial  years  end- 
ing respectively  the  31st  March,  1917,  and  the  31st 
March,  1918. 

[Assented  to  yth  February,  1917-] 

Most  Gracious  Sovereign, 

Whereas  it  appears  by  messages  from  His  Excellency 
the  Most  Noble  Victor  Christian  William,  Duke  of 
Devonshire,  etc.,  etc..  Governor  General  of  Canada,  and 
the  estimates  accompanying  the  said  messages,  that  the 
sums  hereinafter  mentioned  are  required  to  defray  cer- 
tain expenses  of  the  public  service  of  Canada,  not  other- 
wise provided  for,  for  the  financial  years  ending  respec- 
tively the  thirty-first  day  of  March,  one  thousand  nine 
hundred  and  seventeen,  and  the  thirty-first  day  of  March, 
one  thousand  nine  hundred  and  eighteen,  and  for  other 
purposes  connected  with  the  public  service :  May  it  there- 
fore please  Your  Majesty  that  it  may  be  enacted  and  be 
it  enacted  by  the  King's  Most  Excellent  Majesty,  by  and 
with  the  advice  and  consent  of  the  Senate  and  House  of 
Commons  of  Canada,  that : — 

1.  This  Act  may  be  cited  as  The  Appropriation  Act, 
No.  I,  IQ17. 

2.  From  and  out  of  the  Consolidated  Revenue  Fund 
there  may  be  paid  and  applied  a  sum  not  exceeding  in 
the  whole  thirty-two  million,  one  hundred  and  ninety-five 
thousand,  four  hundred  and  forty-one  dollars  and  seven- 
teen cents  towards  defraying  the  several  charges  and  ex- 

329 


THE  CANADIAN  BUDGETARY  SYSTEM 

penses  of  the  public  service,  from  the  first  day  of  April, 
one  thousand  nine  hundred  and  seventeen,  to  the  thirty- 
first  day  of  March,  one  thousand  nine  hundred  and 
eighteen,  not  otherwise  provided  for,  and  being  one- 
fourth  of  each  of  the  several  items  set  forth  in  Schedule 
A  to  this  Act. 

3.  From  and  out  of  the  Consolidated  Revenue  Fund 
there  may  be  paid  and  applied  a  sum  not  exceeding  in  the 
whole  nine  million,  one  hundred  and  tw^enty-seven  thou- 
sand, seven  hundred  and  seventy-seven  dollars  and  forty- 
two  cents  towards  defraying  the  several  charges  and  ex- 
penses of  the  public  service,  from  the  first  day  of  April, 
one  thousand  nine  hundred  and  sixteen,  to  the  thirty- 
first  day  of  March,  one  thousand  nine  hundred  and 
seventeen,  not  otherwise  provided  for,  and  set  forth  in 
Schedule  B  to  this  Act. 

4.  The  amounts  granted  by  The  Appropriation  Act, 
ipi^y  for  the  financial  year  ended  the  thirty-first  day  of 
March,  one  thousand  nine  hundred  and  fifteen,  and  the 
amounts  granted  by  The  Appropriation  Act,  (No.  2), 
ipidy  for  the  financial  year  ended  the  thirty-first  day  of 
March,  one  thousand  nine  hundred  and  sixteen,  and  the 
amounts  granted  by  this  Act  for  the  financial  year  end- 
ing the  thirty-first  day  of  March,  one  thousand  nine 
hundred  and  seventeen,  for  seed  grain  and  relief  other 
than  seed  grain,  to  settlers  in  the  provinces  of  Alberta, 
British  Columbia,  Manitoba  and  Saskatchewan,  shall 
not  be  deemed  to  have  lapsed  if  not  expended  within  the 
financial  year  for  which  they  are  granted,  but  may  be 
expended  in  the  financial  year  ending  the  thirty-first  day 
of  March,  one  thousand  nine  hundred  and  eighteen. 

5.  A  detailed  account  of  the  sums  expended  under  the 
authority  of  this  Act  shall  be  laid  before  the  House  of 
Commons  of  Canada  during  the  first  fifteen  days  of  the 
then  next  session  of  Parliament. 


330 


SCHEDULE  A. 

{Based  on  the  Main  Estimates,  19 17-18.     One- fourth  of 
each  amount  in  this  Schedule  is  voted.) 

Sums  granted  to  His  Majesty  by  this  Act  for  the  financial 
year  ending  31st  March,  1918,  and  the  purposes  for 
which  they  are  granted. 


No. 

of 

Vote 


SERVICE 


Amount 


Total 


10 


CHARGES  OF  MANAGEMENT 

Offices  of  the  Assistant  Receivers  General  and  Country 
Savings  Banks — 

Salaries 

Contingencies 

Printing  Dominion  Notes 

Printing,  advertising,  inspection,  express  charges,  etc.  . . . 
Commission  for  payment  of  interest  on  public  debt,  pur- 
chase of  sinking  funds 

Brokerage  on  purchase  of  sinking  funds 

English  Bill  stamps,  postage,  etc 

Removal  of  foreign  and  uncurrent  coin  from  circulation. . 

CIVIL  GOVERNMENT 

Governor  General's  Secretary'  Office — 

Salaries 

Contingencies,  including  allowance  of  $600  to  Private 

Secretary 

Privy  Council  Office — 

Salaries 

Contingencies 

Administration  of  Justice — 

Salaries,  including  J.  P.  Bill,  at  $4,000,  and  Miss  G. 
Avery,  promoted  to  Second  Division,  Subdivision  B 

at  $1,200 

Contingencies 

Department  of  Militia  and  Defense — 

Salaries,  including  H.  M.  Garrison  at  $1,850 

Contingencies 

Department  of  the  Secretary  of  State — 

Salaries,  including  P.  T.  Kirwan,  promoted  to  First  Divi- 
sion, Subdivision  B;  J.  F.  Champagne,  promoted  to 
Second  Division,  Subdivision  A;  M.  J.  Birdwhistle, 
promoted  to  Second   Division,  Subdivision   B  at 

$1,200 

Contingencies 

Department  of  Public  Printing  and  Stationery — 

Salaries 

Contingencies 

Department  of  the  Interior — 

Salaries 

Contingencies 

Department  of  Indian  Affairs — 

Salaries 

Contingencies 

Royal  Northwest  Mounted  Police — 

Salaries 

Contingencies 


66,850  00 

6,000  00 

300,000  00 

42,000  00 

80.000  00 

5.600  00 

20.000  00 

15,000  00 


26,250  00 

66.600  00 

49.412  50 
10.000  00 


154.437  50 
21,000  00 

187,700  00 
19,500  00 


76,737  50 
16,000  00 

65,762  50 
10,300  00 

1,191,255  00 
115.000  00 

126.862  50 
21,550  00 

21.712  50 
1,700  00 


535,450  00 


SCHEDULE  A—Continued. 


No. 

of 

Vote 

SERVICE 

Amount 

Total 

U 

CIVIL  GOVERNMENT— CoK«»«ttflrf 

Office  of  the  Auditor  General- 
Salaries,  including  Assistant  Auditor  General  at  $4,500 .  . 
Contingencies       ..... 

t        cts. 

143,850  00 
16,500  00 

i 

151,512  50 
30,000  00 

328,100  00 
25.000  00 

180,412  50 
22,000  00 

490,675  00 
100.000  00 

270,950  00 
32,000  00 

188.9.=)0  00 
50,000  00 

182,987  50 
28,000  00 

590.250  00 
85,000  00 

381,985  00 
5,500  00 

842,820  00 
125,000  00 

133,700  00 
15,000  00 

54,137  50 
15,000  00 

21,650  00 
58,151  00 

275,000  00 

7.600  00 
150  00 

30,737  50 
26,000  00 

34,512  50 
15.500  00 

37,650  00 

53.425  00 
7,500  00 

33,075  00 
15.500  00 

S        eta. 

12 

Department  of  Finance  and  Treasury  Board — 

Salaries,  including  Assistant  Deputy  Minister  at  $4,500; 
Comptroller  of  Dominion  Currency  at  $4,500;  Ac- 
countant of  Contingencies  at  $3,000;  Commissioner 
of  Taxation  at  $5,000;  Assistant  Commissioner  of 
Taxation  at  $3,500 

Contingencies 

13 

Department  of  Customs —    . 

Salaries 

14 

Department  of  Inland  Revenue — 

Salaries 

Contingencies.  . . 

15 

Department  of  Agriculture — 
Salaries 

Contingencies.  . .        

16 

Department  of  Marine  and  Fisheries — 

Salaries,  including  A.  R.  Tibbits,  transferred  from  the 
outside  service  at  $2,800 

Contingencies.               .... 

!7 

Department  of  Naval  Service — 
Salaries .      .                               

Contingencies 

18 

Department  of  Railways  and  Canals- 
Salaries,  including  Assistant  to  Minister  at  $4,500;  F.  M. 

Maclennan  at  $1,800;  R.  H.  Lang  at  $1,800 

Contingencies 

19 

Department  of  Public  Works — 

Salaries 

20 

Department  of  Mines- 

Contingencies 

21 

Post  Office  Department — 
Salaries ....                        .      .            

22 

Department  of  Trade  and  Commerce — 
Salaries 

23 

Department  of  Labour — 

Contingencies 

24 

High  Commissioner's  Office,  London — 
Salaiies 

25 

Departments  Generally — 

Contingencies — Care    and    cleaning    of    Departmental 
Buildings,  including  amount  of  $100  to  E.  Snowdon 

26 

General  Consulting  Engineer  to  Dominion  Government — 

Contingencies.                  .                                 .      , 

27 

Department  of  Insurance — 

Salaries ...                                                         ... 

Contingencies 

28 

Department  of  External  Affairs — 
Salaries 

29 

Office  of  the  Conservation  Commission — 

Salaries 

30 

Department  of  Public  Archives — 
Salaries 

Contingencies 

31 

Civil  Service  Commission — 
Salaries .    . 

Contingencies ...,., 

7  224  561  00 

SCHEDULE  A — Continued. 


No. 

of 

Vote 


SERVICE 


Amount 


Total 


ADMINISTRATION  OF  JUSTICE 


Miscellaneous  expenditures 

Living  allowance  for  Judge  of  Atlin  District,  B.C.. 


Supreme  Court  of  Canada 

Contingencies  and  disbursements,  salaries  of  officers 
(Sheriffs,  etc.),  books,  magazines,  etc.,  for  Judges,  not 
exceeding  $300 

Law  books  and  books  of  reference  for  Library  and  binding 
of  same 


Exchequer  Court  of  Canada 

Contingencies — Judges'  travelling  expenses,  remuneration 
to  Sheriffs,  etc.,  printing,  stationery,  etc.,  and  $150  for 
Judges'  books 

Printing,  binding  and  distributing  Exchequer  Court  reports 

Miscellaneous  expenses,  Exchequer  Court  in  Admiralty. . . 

Salary  of  Marshall  in  Admiralty,  Quebec 

To  Chas.  Morse,  for  furnishing  reports  of  Exchequer  Court 
decisions  to  legal  periodicals 


Yukon  Territory 


Travelling  allowance  of  Judge 

Living  allowance  of  Judge 

Salaries  Territorial  Court,  Sheriff  and  clerk,  $4,000  each;two 

stenographers,  $2,000  each 

Living  allowance  of  Court  officers  and  Police  Magistrate. 
Fees  and  expenses  of  witnesses,  jurors  and  interpreters  in 

criminal  trials 

Maintenance  of  prisoners 

Transport  of  prisoners , 

Miscellaneous  expenditure , 


DOMINION  POLICE 


Amount  required , 


PENITENTIARIES 


Kingston   

St.  Vincent  de  Paul. 

Dorchester 

Manitoba 

British  Columbia. . . 

Alberta 

Saskatchewan 

General 


LEGISLATION 

Senate 

Salaries  and  contingent  expenses 

House  of  Commons 

Salary  of  the  Deputy  Speaker 

Salaries 

Expenses  of  Committees,  Sessional  and  extra  Clerks,  etc 

Contingencies 

Publishing  Debates 

Estimates  of  the  Sergeant-at-Arms 

Library  of  Parliambnt 

Salaries,  Including  N.  Aubry  at  $900 

Books  for  the  General  Library,  including  binding 

Books  for  the  Library  of  American  History 

Contingencies 


10,000  00 
1,200  00 


7,500  00 
8,000  00 


6,000  00 

1,500  00 

500  00 

333  34 

50  00 


500  00 
5,000  00 

12,000  00 
8,600  00 

5,000  00 
10,000  00 
4,000  00 
8,000  00 


213,000  00 
203,100  00 
108,800  00 

99,800  00 
146,300  00 

99,300  00 

102,500  00 

6,000  00 


112,166  50 


2,000  00 
203,500  00 
58,700  00 
52,050  00 
60,000  00 
73,162  50 


33,650  00 
18,00  00 
1,000  00 

12,800  00 


Ctt. 


88.183  34 
128,765  00 


978,800  00 


SCHEDULE  A — Continued. 


No. 

of 

Vote 

SERVICE 

Amount 

Total 

LEGISLATION— Conc/«d*(/ 
General 

S        cts. 

300,000  00 
16,000  00 
10.600  00 

5,000  00 
15,000  00 

♦           Ctl. 

41x 

Printing,  binding  and  distributing  the  annual  statutes 

Contingent  expenses  in  connection  with  the  Voters'  Lists.  . 
Contingencies  of  the  Clerk  of  the  Crown  in  Chancery,  in- 
cluding the  employment  of  temporary  help 

Provincial  Voters'  Lists.  ... 

ARTS  AND  AGRICULTURE 

Patent  Record 

973.629  00 

42 

30,000  00 

850.000  00 
20,000  00 

85,000  00 

155,000  00 
105,000  00 

50,000  00 
50.000  00 

5,000  00 
517.000  00 

10,000  00 

325.000  00 
30,000  00 

15,000  00 
700,000  00 

150,000  00 
25,000  00 

43 

Experimental  Farms — Maintenance  of  Central  Farm,  and 
establishment  and  maintaining  of  additional  branch 
Stations 

44 

Branch  of  Entomology 

45 

For  the  administration  and  enforcement  of  the  Destructive 

46 

For  the  development  of  the  dairying  industries,  and  the 
improvement  in  transportation,  sale  and  trade  in  food 
and  other  agricultural  products 

47 

48 

Towaids  the  encouragement  of  cold  storage  warehouses  for 
the  better  preservation  and  handling  of  perishable  food 
products . .              .                         . , 

49 

Exhibitions 

50 

For  renewing  and  improving  Canadian  exhibit  at  Imperial 
Institute,  London,  and  assisting  in  the  maintenance 

51 

Health  of  Animals.          

52 

Dominion    Cattle,    Quarantine    buildings — Repairs,    re- 
newals, etc.  ...                       

53 

For  the  administration  and  enforcement  of  the  Meat  and 

54 

55 

56 
57 

International  Institute  of  Agriculture  to  assist  in  mainte- 
nance thereof  and  to  provide  for  representation  thereat 

For  the  development  of  the  Live  Stock  Industry 

To  enforce  the  Seed  Act,  to  test  seeds  for  farmers  and  seed 
merchants,  to  encourage  the  production  and  use  of 
superior  seeds,  and  to  encourage  the  production  of 
farm  and  garden  crops 

58 

For  the  administration  and  carrying  out  of  the  provisions  of 
The  Agricultural  Instruction  Act 

QUARANTINE 

Salaries  and  contingencies  of  organized  districts  and  public 
health  in  other  districts 

3,122.000  00 

60 

225,000  00 

11,000  00 
12,000  00 

580,000  00 

600,000  00 

6.000  00 

24,000  00 
5-.  000  00 

61 

Tracadie    and    D'Arcy    Island    Lazaretto,    and    leprosy 
generally 

62 

Public  Works  Health  Act 

63 

IMMIGRATION 

Salaries  of  Agents  and  employees  in  Canada,  Great  Britain 

64 

Contingencies  in  Canadian.  British  and  foreign  Agencies 
and  general  immigration  expenses 

65 

Relief  of  distressed  Canadians  in  countries  other  than  the 
United  States 

66 

Administration  of  Chinese  Immigration — 

67 

Contingencies 

PENSIONS 
Mrs.  Wm.  McDougall 

1,215,000  00 

68 

1.200  00 
1.600  00 

69 

Pensions  on  account  of  the  Fenian  Raid,  1866-1870 

SCHEDULE  A— Continued. 


SERVICE 


Amount 


Total 


PENSIONS— Conc/M(f«d 

Pensions  payable  to  militiamen,  and  on  active  service  as 
follows: 

Northwest  Rebellion,  1885 $  14,000  00 

General 30, 000  00 

Pensions  payable  to  Mounted  Police,  Prince  Albert 
Volunteers  and  Police  Scouts  on  account  of  the  Rebel- 
lion of  1885 

Pensions  to  families  of  members  of  the  force  who  lost  their 
lives  while  on  duty: — 

Margaret  Johnson  Biooke 

Annie  Eva  Emily  and  Arthur  Stewart  Mountford  Brooke 

Mrs.   Elizabeth  VVillmett 

Mrs.  Elizabeth  Fitzgerald 

Pension  to  J.  B.  Allan 

Pension  to  Mis.  Mary  E.  Fuller 

Pension  to  Madame  Fabre 

Pensions — European  War 

Salaries  and  Contingent  expenses  of  the  Board  of  Pension 
Commissioners  for  Canada 


MILITIA  AND  DEFENCE 

Allowances,  Active  Militia  Corps 

Cadet  Services 

Contingencies 

Customs  Dues 

Departmental  Library 

Engineer  Services  and  Works 

Grants  to  Associations  and  Bands 

Headquarters  and  District  Staff 

Maintenance  Military  Properties 

Permanent  Force 

Printing  and  Stationery 

Royal  Military  College 

Salaries  and  Wages 

Schools  of  Instruction 

Survey 

Transport  and  Freight 

Training  Areas  and  Lands  for  military  purposes 


RAILWAYS  AND  CANALS 

(Chargeable  to  Capital) 

Canadian  Government  Railways 

Construction  and  betterments 

Dartmouth  to  Deans  Branch  Line 

To  provide  car  ferry — Construction  terminals,  etc 

Hudson  Bay  Railway 

Construction  of  railway,  terminals  and  elevator.  . . 

National  Transcontinental  Railway 

To  pay  claims  for  right-of-way,  etc 

Quebec  Bridge 

Construction 

Welland  Ship  Canal 

Construction 


44,000  00 

1.290  28 

456  25 

54  75 

54  75 

525  00 

450  00 

600  00 

1,000  00 

8,000,000  00 

375,000  00 

8.426,231  03 

80,000  00 

75,000  00 

60,000  00 

25,000  00 

1,000  00 

565.500  00 

50,000  00 

205,500  00 

180.000  00 

2.300.000  00 

70,000  00 

185,000  00 

250.000  00 

150.000  00 

40.000  00 

50.000  00 

200,000  00 

4.487.000  00 

6,500  000  00 

65,000  00 

310,000  00 


3,000.000  00 
500,000  00 

1,600.000  00 
200,000  00 


SCHEDULE  A— Continued. 


No. 

of 

Vote 


SERVICE 


Amount 


Total 


103 


104 


105 


106 


107 


108 


109 


no 


RAILWAYS  AND  CANALS— Concluded. 
(Chargeable  to  Capital)— Concluded 
Canals — Capital 
Trent  Canal 

Construction 

RAILWAYS  AND  CANALS 

(Chargeable  to  Income) 

Canals 

Chambly 

Spare  lock  gates 

St.  Anne's  Lock 

Lockmaster's  house 

St.  Peters 

Improvements 

Soulanges 

Piers  and  breakwater 

Trent 

Improvements 

Wetland 

Heavy  repairs 

Miscellaneous 

Arbitrations  and  awards 

Board  of  Railway  Commissioners  for  Canada — Mainte- 
tenance  and  operation  of,  including  $800  for  Clyde 
Leavitt  as  chief  fire  inspector 

Board  of  Railway  Commissioners  for  Canada — To  pay 
expenses  in  connection  with  cases  before  the 

Contribution  of  the  Government  Railways  to  the  faculty  of 
McGill  University  towards  the  foundation  of  a  school 
of  railway  engineering  and  transpoi  tation  in  general,  in 
connection  with  the  faculty  of  Applied  Science 

Contribution  of  the  Government  Railways  to  the  faculty  of 
the  Polytechnic  School, Montreal, for  the  advancement 
of  learning  in  connection  with  railway  engineering  and 
transportation  in  general 

Costs  of  litigation 

Governor  General's  Cars — Attendance,  repairs  and  altera- 
tions to 

Miscellaneous  works  not  provided  for 

Surveys  and  Inspections — Canals 

Surveys  and  Inspections — Railways 

To  pay  expenses  in  connection  with  consolidation  of  Rail- 
way act 

To  provide  for  inquiry  and  report  on  the  railway  situation 
of  Canada 

To  provide  for  a  continuous  audit  on  behalf  of  the  Govern- 
ment of  Canada,  of  the  revenues  and  expenditures  of 
the  Canadian  Northern  Railway  and  Grand  Trunk 
Railway  Systems 


I        cts 


600,000  00 


$         cts. 


1,700  00 

1,500  00 

45.000  00 

1,000  00 

25,000  00 

30.000  00 

2.000  00 

175,800  CO 
15,000  00 

2.500  00 


2,500  00 
3,000  00 

5,000  00 

2,500  00 

25,000  00 

40,000  00 

2,000  00 

120.000  00 


10,000  00 


12.775,000  00 


509.500  00 


SCHEDULE  A — Continued, 


No. 

of 

Vote 

SERVICE 

Amount 

Total 

PUBLIC  WORKS 

$        cts. 

$        ctt. 

{Chargeable  to  Capital) 

Public  Buildings 

( 
111 

Ottawa  Parliament  building— Restoration— The  plans  for 
the  said  building  and  the  method  to  be  adopted  for 
securing  the  reconstruction  thereof  to  be  subject  to  the 
approval  of  the  Joint  Committee  appointed  by  the 
Prime  Minister  and  the  Leader  of  the  Opposition .... 

2.000.000  00 

Harbours  and  Rivers 

St.  John  Harbour — Improvements 

1.000,000  00 
1.000.000  00 

700,000  00 
1,000,000  00 

750,000  00 
1.000.000  00 

Quebec  Harbour — Dry  Dock  at  Lauzon. 

Quebec  Harbour— River  St.  Charles — Improvements  to 

11? 

Port  Arthur  and  Fort  William— Harbour  and  river  im- 

Victoria  Harbour — Improvements.  .  .                      

7.450.000  00 

PUBLIC  WORKS 

{Chargeable  to  Income) 

Public  Buildings 

Nova  Scotia 

3.000  00 
5.000  00 

5,500  00 
2,000  00 

113 

Halifax- Dominion  buildings— Improvements,  repairs  etc. 
Stellarton— Public  building  (Revote  of  $4,000  lapsed)— In- 
cluding cost  of  site  with  interest  at  5  per  cent  thereon. 
Sydney  public  building — Improvements.        ■    . .          .    . 

New  Brunswick 

114 

St.  John — Dominion  buildings— Improvements,  repairs, 
etc 

5.000  00 
5.000  00 

Maritime  Provinces  Generally 

115 

Dominion  public  buildings — Improvements,  repairs,  etc.  . 
Quebec 

25,000  00 

Dominion  public  buildings— Improvements,  repairs,  etc. 
Grosse  He  Quarantine  Station — Improvements  and  repairs 

35,000  00 

15.000  00 
20.000  00 
20,000  00 
30.000  00 
80.000  00 
2.000  00 
95.000  00 

116 

Montreal  General  Post  Office— Remodelling  old  building. . 

Montreal  Dominion  buildings— Improvements,  repairs,  etc 

Quebec  Post  Office — Enlargement  and  alterations 

Roberval — Public  building,  drain,  etc 

Ontario 

Cardinal — Public  buildina                             

4.000  00 

3.500  00 

3.000  00 

35.000  00 

3.100  00 

8.000  00 

75.000  00 

25.000  00 

10.000  00 

2,500  00 

Cayuga— Public    building— Heating   and    plumbing   im- 

117 

Dominion  public  buildings— Improvements,  repairs,  etc. . 
Hamilton  Post  Office — Electric  wiring  and  fixtures,  etc. . . 
Kingston.  R.M.C. — Covered  drill  hall 

Ottawa  departmental  buildings-~~Fittings,  etc   . 

Ottawa  Departmental  buildings— Rewiring,  etc 

Ottawa  Departmental  buildings — Renewing  metal  cover- 

SCHEDULE  A—Continued. 


No. 
of 

Vote 

SERVICE 

Amount 

Total 

PUBLIC  WORKS— Continued 

$        cts. 

S        eta. 

(Chargeable  to  Income)— Continued 

Public  Buildings — Concluded 

Ontario — Concluded. 

1 

Ottawa  Departmental  buildings — Building  and  macerating 
plant  for  Currency  Branch  of  Finance  Department.  . 
Ottawa  Public  buildings — F"ire  escapes.  ... 

22,000  00 

12,000  00 
5,000  00 

10,000  00 

3.000  00 

7,000  00 

500,000  00 

12,000  00 

117 

Ottawa  Royal  Mint — Repairs  and  improvements 

Palmerston — Public  building 

St.  Catharines  public  building — Repairs  to  roof,  etc 

Sydenham — Public  building 

Toronto — Postal  Station  "A" 

Toronto  Dominion  buildings — Improvements,  repairs,  etc. 

Manitoba 

118 

Dominion  public  buildings — Improvements,  repairs,  etc.  . 
Winnipeg  Dominion  buildings — Improvements,  repairs,  etc 

Winnipeg  immigration  buildings — Improvements 

Winnipeg — New  immigration  building 

18,000  00 

20,000  00 

3,000  00 

40,000  00 

Saskatchewan 

119{ 

Dominion  public  buildings — Impi-ovements,  repairs,  etc. . 
Sutherland— Water  supply  for  Forest  Nursery  Station 

Alberta 

15.000  00 
8.000  00 

Calgary— Drill  hall 

250.000  00 

3,000  00 

15,000  00 

120 

Calgary— Dominion  buildings — Imprnvements.repairs.etc. 
Dominion  public  buildings — Improvements,  repairs,  etc.  . 

British  Columbia 

Ashcroft — Public  Building 

10,000  00 

17,000  00 

1,000  00 

7,000  00 

10,000  00 

121 

Dominion  public  buildings — Improvements,  repairs,  etc.  . 
New  Westminster — Public  building — Paving  roadway.  .  .  . 
Vancouver — Dominion  buildings — Improvements,  repairs, 
etc 

William's  Head  Quarantine  Station — Repairs  to  existing 
buildings,  fittings,  etc 

Generally 

Experimental  Farms — New  buildings  and  improvements, 
renewals  and  repairs,  etc..  in  connection  with  existing 
buildings,  fences,  etc. 

150,000  00 

5,000  00 

10,000  00 

30,000  00 

Dominion  public  buildings — Fire  escapes.  . 

Rents,  Repairs,  Furniture,  Heating,  etc. 

Ottawa  public  buildings:— 

Astronomical      Observatory — Maintenance,     care     of 
grounds,  etc 

5,000  00 
45,000  00 
60,000  00 

180,000  00 

450.000  00 

65,000  00 
17,000  00 
47,000  00 

25,000  00 
4,000  00 

Elevator  attendants 

Gas  and  electric  light,  including  roads  and  bridges 

Heating,  including  salaries  of  engineers,  firemen  and 
watchmen 

123 

Repairs,  furniture,  grounds,  snow  and  street  mainte- 
nance, etc.  ...        ... 

Rideau  Hall  (including  grounds)  improvements,  furni- 
ture, maintenance,  etc.  .  .  . 

Rideau  Hall — Allov/ance  for  fuel  and  light 

Telephone  service 

Dominion  Public  Buildings: — 

Dominion  Immigration  Buildings — Repairs,  furniture, 
etc 

Dominion  Quarantine  Stations — Maintenance 

SCHEDULE  A— Continued. 


No. 

of 

Vote 


SERVICE 


Amount 


Total 


123 


123 


PUBLIC  VfOKKSr-Continued 

{Chargeable  to  Income) — Continued 

Public  Buildings — Continued 

Rents,  Repairs,  Furniture,  Heating,  etc. — Concluded. 

Fittings,  and  general  supplies  and  furniture 

Heating 

Lighting 

Power  for  running  elevators,  stamp  cancelling  machines, 

etc 

Rents 

Salaries  of  caretakers,  engineers,  firemen,  etc 

Supplies  for  caretakers,  etc 

Water 

Yukon   Public    Buildings — Rents,   repairs,   fuel,    light, 

water  service  and  caretakers'  salaries 

Harbours  and  Rivers 
Nova  Scotia 


Amherst  Point — Repairs  to  wharf 

Anderson's  Cove — Repairs  to  breakwater 

Annapolis  Royal — Repairs  to  pier 

Burlington — Repairs  to  wharf 

Canning — Repairs  to  wharf 

Cape  St.  Mary — Repairs  to  breakwater 

Chipman  Brook — To  repair  breakwater 

Church  Point — Repairs  to  wharf  and  breakwater 

Culloden — To  repair  breakwater  and  remove  rock.  .  . . 

Devil's  Island — Repairs  to  breakwater 

Digby  Pier — Renewals 

Eagle  Head — Repairs  to  breakwater 

East  River — Improvements 

Fox  Island — Repairs  to  breakwater  approach 

Harbours  and  rivers  generally — Repairs  and  improvements 

Little  Brook — Repairs  to  breakwater 

Little  Harbour — Reconstruction  of  whaif 

Margaree — Repairs  to  breakwater 

Margaretville — Repairs  to  breakwater , 

McKay's  Point  (Judique) — Repairs  to  breakwater 

McNair's  Cove — Repairs  to  breakwater 

Meteghan  River — Repairs  and  improvements  to  break- 
water  

Necum  Teuch — Repairs  to  wharf 

North  River  (St.  Anne's) — Repairs  to  wharf 

North  Sydney — Repairs  to  ballast  wharf 

Parrsboro — Repairs  to  wharf 

Port  George — Repairs  to  breakwater 

Port  Hilford — Repairs  to  breakwater 

Round  Hill — Repairs  to  wharf 

Sandy  Cove — Repairs  to  breakwater 

Saulnierville — Breakwater  improvements  and  repairs 

Scott's  Bay — Repairs  to  breakwater 

Shubenacadie  River — To  pay  the  Dominion  Atlantic  Rail- 
way Co.  for  the  enlargement  of  draw  span  on  railway 
bridge  and  construction  of  warping  piers 

Tiverton — Repairs  to  breakwater 

Trout  Cove — Removal  of  rock  and  gravel  and  repairs  to 
new  breakwater 

West  Arichat — Repairs  to  wharf 

Yarmouth  Harbour — Repairs  and  improvements 


Prince  Edward  Island 


Annandale — Repairs  to  wharf 

China  Point — Repairs  to  wharf 

Harbours  and  Rivers  generally — Repairs  and  improve- 
ments  

Kurd's  Point,  Bedeque — Repairs  and  improvements  to 
wharf 

Little  Sands— Wharf  improvements 


cts. 


160,000  00 
240,000  00 
200.000  00 

38.000  00 

700,000  00 

550,000  00 

30,000  00 

50.000  00 

63.000  00 


700  00 

500  00 

2,000  00 

950  00 

2.500  00 

3,000  00 

1.000  00 

4.000  00 

4,000  00 

1,300  00 

2.500  00 

1.650  00 

140,000  00 

500  00 

60,000  00 

1,500  00 

800  00 

900  00 

3,000  00 

600  00 

900  00 


1,500  00 
2,000  00 
600  00 
2,300  00 
2,000  00 
2,000  00 
1,800  00 
1 . 500  00 
2,200  00 
3.000  00 
1.300  00 


23.000  00 
1,600  00 

3.000  00 

700  00 

4,500  00 


750  00 
750  00 


14,000  00 


900  00 
,600  00 


$    cts. 


SCHEDULE  A— Continued. 


No. 

of 

Vote 


SERVICE 


Amount 


PUBLIC  WORKS— Cow/muecf 

{Chargeable  to  Income) — Continued 

Harbours  and  Rivers — Continued 

Prince  Edward  Island — Concluded. 

Miminigash — Repairs  to  breakwaters  and  beach  protection 

works 

Port  Selkirk — Repairs  to  pier 

125{     Souris — Repairs  to  breakwater 

Tignish — Repairs  to  breakwaters 

Victoria — Repairs  to  pier 

Wood  Island — Repairs  to  breakwaters 

New  Brunswick 

Anderson's  Hollow — Repairs  to  wharf 

Back  Bay — Wharf  repairs  and  improvements 

Bathurst — Harbour  improvements 

Cape  Bald — Repairs  to  breakwater-pier 

Dorchester — Wharf  improvements 

Great  Salmon  River — Repairs  and  improvements  to  break- 
water  

126^    Harbours  and   Rivers  generally — Repairs  and  improve- 
ments  

Mills  Point — Repairs  to  wharf 

Neguac — Repairs  to  wharf 

Richibucto  Beach — Breakwater  repairs  and  improvements 
Shippigan  Gully — Repairs  to  breakwater  and  breastworks 

St.  Nicholas  River — Repairs  to  wharf 

Tynemouth  Creek — To  reconstruct  and  repair  breakwater 
Welchpool — Repairs  to  wharf 

Maritime  Provinces  Generally 

127      To  purchase  creosoted  timber  for  works  in  the  Maritime 
Provinces  generally 

Quebec 

Anse  aux  Gascons — Repairs  to  wharf 

Baie  St.  Paul — Repairs  to  wharf 

Berthier  (en  bas) — Repairs  to  wharf 

Cape  Cove — Repairs  to  pier 

Chambord — Wharf  repairs  and  reconstruction 

Clark  City — Reconstruction  of  wharf 

Desjardins — Repairs  to  wharf 

Father  Point — Wharf  improvements 

Gaspe  Deep  Water  Wharf — Repairs , 

Harbours  and   Rivers  generally — Repairs  and  improve- 
ments  

Hudson — Reconstruction  of  wharf 

Isle  Perrot  North — Repairs  to  wharf 

Isle  Verte — Repairs  to  wharf 

Lacolle — Repairs  to  wharf 

128^    Laprairie — Protection  works , 

Lotbiniere — Repairs  to  wharf 

Murray  Bay — Repairs  and  improvements  to  wharf , 

Ouareau  River — Repairs  to  icebreaker , 

Phillipsburg — Wharf  reconstruction 

Point  Pizeau — Repairs  to  wharf 

Point  St.  Pierre — Repairs  to  breakwater , 

Rimouski — Harbour  improvements 

Rimouski  wharf — Water  supply , 

Riviere  des  Vases — Repairs  to  pier 

Riviere  Quelle — Repairs  and  improvements  to  wharf.  . . . , 

St.  Alexis — Repairs  to  wharf , 

St.  Alphonse — Repairs  to  wharf 

St.  Andre  de  Kamouraska — Repairs  to  wharf , 

Ste.  Anne  des  Momts — Landing  pier , 

Ste.  Felicity — Repairs  to  wharf 

St.  Ignace  de  Loyola — Repairs  to  dyke 

St.  Ir^n^e — Repairs  to  wharf 


cts. 


1,000  00 

800  00 

1,000  00 

2.500  00 

1 , 100  00 

2.500  00 

1,400  00 

3,500  00 

85,000  00 

1.500  00 

1.500  00 

1 . 100  00 

40,000  00 

600  00 

4,000  00 

I.OOO  00 

3,500  00 

900  00 

5,500  00 

850  00 

5,000  00 

500  00 

2,500  00 

1.000  00 

1,200  00 

5,000  00 

4,500  00 

2.500  00 

1 , 100  00 

17,000  00 

75.000  00 

4,800  00 

1.600  00 

2.500  00 

2,900  00 

85,000  00 

1,800  00 

3,500  00 

1,500  00 

2,000  00 

1 1 , 100  00 

1.900  00 

70,000  00 

6.000  00 

1,000  00 

5,400  00 

-3,800  00 

2.-600  00 

1,500  00 

6.650  00 

600  00 

600  00 

660  00 

SCHEDULE  A— Continued. 


SERVICE 


Amount 


Total 


PUBLIC  WORKS— Continued 

(Chargeable  to  Income) — Continued 

Harbours  and  Rivers — Concluded 

Quebec — Concluded 

St.  Jean  Deschaillons — Repairs  to  wharf  approach 

St.  Johns — To  rebuild  ice  pier  and  replace  piles 

St.  Laurent,  Island  of  Orleans — Repairs  to  wharf 

St,  Michel  de  Bellechasse — Repairs  to  wharf 

St.  Paul,  He  aux  Noix — Repairs  to  wharf 

Tiois  Pistoles — Repairs  to  wharfs  and  breakwater 

Varennes — Protection  work 

Ontario 

Belle  River — Repairs  to  sheet  piling 

Big  Bay  Point — Repairs  to  wharf 

Bowmanville — Repairs  to  pier 

Bronte — Repairs  to  pier 

Bruce  Mines — Repairs  to  and  reconstruction  of  wharf. .  . . 

Coburg — Repairs  to  east  pier 

Colchester — Repairs  to  wharf 

French  River  dams — Repairs  and  maintenance 

Goderich — Repairs  to  harbour  works 

Haileybury — Repairs  to  wharfs 

Harbours  and  Rivers  generally — Repairs  and  improve- 
ments  

Kingston — Harbour  improvements 

Leamington — Repairs  to  wharf 

Michipicoten  River — Repairs  to  wharf 

Newcastle — Repairs  to  east  pier T 

New  Liskeard — Repairs  to  wharf 

Pelee  Island — Repairs  to  dock 

Pembroke — Repairs  to  wharf 

Petawawa — Repairs  and  improvements  to  wharf 

Port  Bruce — Repairs  to  piers 

Port  Burwell — Repairs  to  piers 

Port  Stanley — Harbour  improvements 

Rainy  River — Repairs  to  protection  work 

Rondeau  Harbour — Repairs  and  renewals  to  piers 

Saugeen  River  at  Southampton — Repairs  to  piers 

Shrewsbury — Repairs  to  pier 

Silver  Centre — Repairs  to  wharf 

Manitoba 

Arnes — Repairs  to  wharf 

Gimli — Repairs  to  wharf 

Harbours  and   Rivers  generally — Repairs  and  impiove- 

ments ' 

Hnausa — Repairs  to  wharf ' 

Lake  Francis  Outlet — Repairs  to  guard  piers 

Saskatchewan  and  Alberta 

Harbours  and  Rivers  generally — Repairs  and  improve- 
ments  

British  Columbia 

Fraser  River  (lower) — Improvements 

Harbours  and  Rivers  generally — Repairs  and  Improve- 
ments  

Holberg — Repairs  to  wharf 

James  Island — Repairs  to  wharf 

Metchosin — Repairs  to  wharf 

Prince  Rupert  Quarantine  Station — Repairs  to  wharf. .  .  . 

Quatsino — Repairs  to  wharf 

Sidney  Island — Repairs  to  wharf 

Stlckine  River — Improvements 

To  purchase  a  supply  of  creoaoted  timber  for  use  in  re- 
pairing wharfs 


760  00 

1,200  00 

3,800  00 

1,600  00 

750  00 

1,000  00 

1,200  00 

900  00 

850  00 

10,000  00 

1,000  00 

1.000  00 

15.000  00 

1,000  00 

1.000  00 

3.000  00 

2,000  00 

65.000  00 

52,000  00 

2,100  00 

1,100  00 

17,500  00 

700  00 

1,000  00 

9,400  00 

800  00 

2,100  00 

36,000  00 

96,000  00 

800  00 

3.500  00 

3,600  00 

900  00 

1.000  00 

1,500  00 

500  00 

15,000  00 

1 , 200  00 

800  00 

20.000  00 

20,000  00 

75,000  00 

3,300  00 

750  00 

1,700  00 

1,500  00 

4,300  00 

2,200  00 

5,400  00 

10.000  00 

cts. 


SCHEDULE  A— Continued. 


No. 

of 

Vote 

SBRVICE 

Amount 

Total 

PUBLIC  WORKS— Concluded 

t        cts. 

$       Cts. 

^Chargeable  to  Income) — Concluded 

Harbours  and  Rivers — Continued 

British  Columbia— Concluded. 

Ucluelet — Repairs  to  whaif                       .      .      .        ...... 

600  00 
6,500  00 
2,100  00 

3,500  00 

iV 

Vargas  Island — Repairs  to  wharf.                            .    . 

Williams  Head  Quarantine  Station — Improvements  and 

Generally 

13.1 

Harbours  and  Rivets — Generally 

40.000  00 

Dredging 

New  Dredging  Plant^ — Ontario  and  Quebec 

65.000  00 
500,000  00 
500,000  00 

90,000  00 
550,000  00 

114 

Dredging — Ontario  and  Quebec 

Dredging — Manitoba.  Saskatchewan  and  Alberta 

Dredging — British  Columbia 

Slides  and  Booms 

135 

Slides  and  booms  generally 

5,000  00 

Roads  and  Bridges 

5.000  00 
3.500  00 

7.000  00 

136 

Edmonton — Repairs  to  bridge 

Ottawa — Maintenance   and   repair  of   bridges,   and   ap- 
proaches  

Telegraph  and  Telephone  Lines 

Nova  Scotia 

137 

Cape  Breton  Telegraph  System — Repoling  and  general 
repairs 

4.600  00 

Prince  Edward  Island 

138 

For  half  cost  of  reconstruction  of  telegraph  lines  jointly 
owned  by  the  Anglo-American  Telegraph  Co.,  and  the 
Dominion  Government 

17,000  00 

Quebec 

139 

3.000  00 

Saskatchewan  and  Alberta 

Moosejaw — Wood  Mountain  telegraph  line — Renewal  of 
poles 

5.000  00 
3.200  00 
3.325  00 
2,350  00 

140 

Peace  River  Line — Office  and  dwelling  at  Grande  Prairie . . 

Peace  River  Line — Office  and  dwelling  at  Dunvegan 

Repairs  and  improvements  to  office  buildings 

British  Columbia 

141 

Mainland  telegraph  and  telephone  lines — General  repairs 
and  improvements 

22.400  00 

Miscellaneous 

142 

Architectural   Branch — Salaries  of   architect*,   clerks   of 
work*,    inspectors,    draughtsmen,   clerk*   and    mes- 
senger* of  outside  service 

60,000  00 
435.000  00 

Engineering    Branch — Salaries   of   engineers,    inspector*, 
superintendents,  draughtsmen,  clerks  and  messengers 
of  outside  service 

SCHEDULE  A— Continued. 


No. 

of 

Vote 


SERVICE 


Amount 


Total 


PUBLIC  WORKS— Continued 

(Chargeable  to  Income) — Continued 

Miscellaneous — Concluded. 

Monument  of  His  late  Majesty  King  Edward  VII 

Construction  and  operation  of  water  storage  dams  on  the 
Ottawa  River  and  tributaries,  surveys  in  connection 
therewith,  and  settlement  of  land  damages 

Dry  docks  generally — Inspection,  etc 

River  gaugings  and  metering 

The  National  Gallery  of  Canada 

Surveys  and  inspections 

To  cover  balance  of  expenditure  for  works  already  author- 
ized for  which  the  appropriations  may  be  insufficient, 
provided  the  amount  for  any  one  work  does  not  exceed 
$200 

Monument  to  memory  of  the  late  Hon.  Thos.  D'Arcy 
McGee 

Accounts  Branch — Salaries  of  agents  and  clerks,  travelling 
and  contingent  expenses  of  outside  service 

Georgian  Bay  Ship  Canal  Royal  Commission 

To  pay  Western  Dry  Dock  and  Ship-building  Co.,  Limited, 
of  Port  Arthur,  a  portion  of  the  fourth  payment  of 
subsidy  due  them  upon  their  completion  of  the  work 
covered  by  the  agreement  ratified  by  Chap.  57,  3-4 
George  V,  1913,  notwithstanding  that  the  work  is  not 
completed 

For  operation  and  maintenance  of  inspection  boats 


MAIL  SUBSIDIES  AND  STEAMSHIP  SUBVENTIONS 
Atlantic  Ocean 

Steam  service  between  Annapolis  and  London  or  Hull, 
England,  or  both 

Steam  service  between  Canadian  Atlantic  ports  and  Aus- 
tralia and  New  Zealand 

Ocean  and  mail  service  between  Canada  and  Great  Britain 

Steam  service  between  Canada  and  Cuba 

Steam  service  or  services  between  Canada  and  Newfound- 
land   

Steam  service  between  Canada  and  the  West  Indies  or 
South  America  or  both 

Steam  service  between  Canada  and  South  Africa 

Steam  service  between  Halifax,  St.  John's,  Newfoundland 
and  Liverpool 

Steam  service  between  Montreal,  Quebec  and  Manchester, 
England,  during  the  summer  season,  and  between  St. 
John,  Halifax  and  Manchester  during  the  winter 
season 

Winter  steam  service  between  St.  John,  Dublin  and  Belfast 

Winter  steam  service  between  St.  John  and  Glasgow 

Winter  steam  service  between  St.  John,  Halifax  and 
London 

Steam  service  between  St.  John,  Halifax  and  London .... 


Pacific  Ocean 


New 


Steam  service  between  Canada  and  Australia   or 

Zealand  or  both,  on  Pacific  Ocean 

Steam  service  between  Canada,  China  and  Japan. . , 
Steam  service  between  Prince  Rupert,  B.  C,  and  Queen 

Charlotte  Islands 

Steam  service  between  Victoria  and  San  Francisco 
Steam  service  between  Victoria,  Vancouver  way  ports 

Skagway 

Steam  service  between  Victoria  and  West  Coast  Vancouver 

Island 

Steam  service  between  Vancouver  and  northern  ports  of 

British  Columbia 


cts. 


10,000  00 


115,000  00 

10,000  00 

20,000  00 

8,000  00 

130,000  00 


10,000  00 

8,000  00 

20,000  00 
25.000  00 


35,641  50 
50.000  00 


5,000  00 

140,000  00 

1,000  000  00 

25,000  00 

70,000  00 

340,666  66 
146.000  00 

20,000  00 


35,000  00 

7,500  00 

15.000  00 

15,000  00 
25,000  00 


180,509  00 
253,333  34 

16,000  00 
3,000  00 

12,500  00 

5,000  00 

16,800  00 


cts. 


SCHEDULE  A— Continued. 


No. 

of 

Vote 


SERVICE 


Amount 


MAIL  SUBSIDIES  AND  STEAMSHIP  SUBVENTIONS 
— Concluded 

Local  Services 


167 
168 


169 
170 


171 
172 
173 

174 

175 

176 

177 

178 
179 

180 

181 

182 

183 

184 
185 

186 

187 
188 
189 
190 

191 
192 

193 

194 

195 

196 

197 

198 

199 

200 
201 


Steam  service  between  Haddock  and  lona 

Steam  service  between  Charlottetown,  Victoria  and  Holi- 
day's Wharf 

Steam  service  between  Froude's  Point  and  Lockport,  N.  S 

Steam  service  from  the  opening  to  the  closing  of  navigation 

in    1917,   between   Gaspe    Basin   and    Dalhousie  or 

Campbellton 

Steam  service  between  Grand  Manan  and  the  mainland 
Steam  service  between  Halifax,  Canso  and  Guysboro . . 
Steam  service  between  Halifax  and  Newfoundland  via  Cape 

Breton  ports 

Steam  service  between  Halifax.  Mahone  Bay,  Tancook 

Island  and  La  Have  River  ports 

Steam  service  between  Halifax  and  Spry  Bay  and  ports  in 

Cape  Breton 

Steam  service  between  Halifax,  South  Cape  Breton  and 

Bras  d'Or  Lake  ports 

Steam  service  between   Halifax  and  West  Coast  Cape 

Breton  calling  at  way  ports 

Steam  service  between  Halifax  and  Sherbrooke 

Steam  service  from  the  opening  to  the  closing  of  navi- 
gation between  Kenora  and  Fort  Frances 

Steam  service  from  the  opening  to  the  closing  of  navigation 

in   1917  between  the  mainland  and  the  Magdalen 

Islands 

Steam  service  between  Mulgrave  and  Canso 

Steam  service  between  Mulgrave  and  Guysboro,  calling  at 

intermediate  ports 

Steam  service  between  Newcastle,  Neguac  and  Escuminac, 

calling  at  all  intermediate  points  on  the  Miramichi 

River  and  Miramichi  Bay 

Steam  service  between  Pelee  Island  and  the  mainland .... 
Steam  service  between  Petit  de  Grat  and  Intercolonial 

Railway  terminus  at  Mulgrave 

Steam  service  on  the  Petitcodiac  River  between  Moncton 

and  way  ports,  and  a  port  or  ports  on  the  west  coast  of 

Cumberland  County 

Steam  service  between  Pictou  and  Montague,  calling  at 

Murray  Harbour  and  Georgetown 

Schooner  service  between  Pictou,  New  Glasgow,  Antigonish 

County  ports  and  Mulgrave 

Steam  service  from  the  opening  to  the  closing  of  navigation 

in  1917,  between  Pictou,  Mulgrave  and  Cheticamp 
Steam  service  from  the  opening  to  the  closing  of  navigation 

in  1917,  between  Port  Mulgrave,  St.  Peter's,  Irish 

Cove  and  Marble  Mountain  and  other  ports  on  the 

Bras  d'Or  Lakes 

Steam  service  between  Prince  Edward  Island  and  Cape 

Breton  and  Newfoundland 

Steam  service  during  the  year  1917,  between  Quebec  and 

Harrington,  calling  at  the  ports  and  places  along  the 

northern  shore  of  the  River  St.  Lawrence  between  such 

terminals 

Steam  service  between  Quebec  and  Gaspe  Basin,  touching 

at  intermediate  points 

Steam  service  between  Quebec  and  ports  on  the  north  shor^ 

of  the  Isle  of  Orleans 

Steam  service  between  Riviere  du  Loup,  Tadoussac  and 

other  North  Shore  ports 

Winter  steam  service  between  Riviere  du  Loup,  Tadoussac 

and  other  St.  Lawrence  ports 

Winter  steam  service  between  St.  Catharines  Bay  and 

Tadoussac 

Steam  service  between  St.  John  and  ports  in  Cumberland 

Basin 

Steam  service  between  St.  John,  N.  B.,  and  St.  Andrew, 

N.  B.,  calling  at  intermediate  points 

Steam  service  between  St.  John  and  Bridgetown 

Steam  service  between  St.  John  and  Digby 


5,825  00 

2,500  00 
600  00 

15,000  00 

10.000  00 

5,000  00 

10,000  00 

4,000  00 

4.000  00 

6,000  00 

4.000  00 
2.000  00 

8.000  00 

18,000  00 
6,500  00 

5 . 500  00 

2,500  00 
8,000  00 

7,000  00 

2,500  00 

6.000  00 

1,000  00 

7,500  00 

6,500  00 

20,000  00 

28.000  00 

8,500  00 

4.500  00 

6.000  00 

8.000  00 

3.500  00 

3-.  000  00 

4.000  00 

2.500  00 

20.000  00 

SCHEDULE  A— Continued. 


SERVICE 


Amount 


Total 


MAIL  SUBSIDIES  AND  STEAMSHIP  SUBVENTIONS 
— Concluded. 

Local  Services — Concluded 

Steam  service  between  St.  John,  Digby,  Annapolis  and 
Granville,  viz.  along  the  west  coast  of  the  Annapolis 
Basin 

Steam  service  between  St.  John,  N.  B.,  and  ports  on  the 
Bay  of  Fundy  and  Minas  Basin,  and  Margaretville, 
N.S 

Steam  service  or  services  between  St.  John,  Westport  and 
Yarmouth  and  other  way  ports 

Steam  service  during  the  year  1917,  between  St.  Stephen, 
N.  B.,  Ste.  Croix  River  Points,  Deer  Island,  Campo- 
bello  and  the  inner  islands,  Passamaquoddy  Bay  and 
L'Etete  or  Back  Bay 

Steam  service  during  the  season  of  1917,  between  Sydney 
and  Bay  St.  Lawrence,  calling  at  way  ports 

Steam  service  during  the  season  1917,  between  Sydney  and 
Wliycocomagh 

Steam  service  from  Sydney,  N.  S.  .around  the  East  Coast  of 
Cape  Breton  to  Hastings  and  return  to  Sydney  via  the 
Bras  d  'Or  Lakes 

Expenses  in  connection  with  the  supervision  of  subsidized 
steamship  services 

DEPARTMENT  OF  THE  NAVAL  SERVICE 

Naval  Service — To  provide  for  the  maintenance  and  up- 
keep of  ships.  Naval  College,  Dockyards  at  Halifax 
and  EsQuimalt  and  Royal  Naval  Canadian  Volunteer 
Reserve 

Fisheries  Protection  Service — To  provide  for  the  repairs 
and  maintenance  of  fisheries  protection  steamers. . . . 

Fisheries  Protection  Service — To  provide  for  new  vessels. . 

Hydrographic  Surveys 

Radiotelegraph  Service — To  provide  for  the  building  and 
maintenance  of  wireless  stations 

Tidal  Service — To  provide  for  the  maintenance  of  tidal 
stations  and  surveying  steamers 

Patrol  of  the  northern  waters  of  Canada , 

Life-saving  stations,  including  rewards  for  saving  life. . . . 

OCEAN  AND  RIVER  SERVICE 

Maintenance  and  repairs  to  Dominion  steamers  and  ice- 
breakers  

Examiners  of  Masters  and  Mates 

Investigations  into  wrecks 

Expenses  of  Schools  of  Navigation 

Registration  of  Shipping 

Removal  of  obstructions  in  navigable  waters 

Inspection  of  live  stock  shipments 

To  continue  subsidy  for  wrecking  plants — 

Quebec,  Maritime  Provinces  and  British  Columbia.  . 

Unforeseen  expenses 

To  provide  for  the  construction  of  two  steamers  to  replace 
the  "Quadre" 

PUBLIC  WORKS 

{Chargeable  to  Capital) 

Marine  Department 


River  St.  Lawrence  Ship  Chianne! 

To  provide  for  construction  and  completion  of  dredging 
plant  for  St.  Lawrence  River  from  Montreal  to  Father 
Point 


2,000  00 

8.000  00 
10.000  00 

6.000  00 
6,000  00 
3,000  00 

5,500  00 
3,000  00 


1,000,000  00 

375,000  00 
100,000  00 
290,000  00 

295,000  00 

35,000  00 
50,000  00 
125.400  00 


180,000  00 

16,500  00 

12,300  00 

8,000  00 

3,000  00 

20,000  00 

5.000  00 

45.000  00 
5,000  00 

150,000  00 


672,000  00 


216,550  00 


1.444,800  00 


888.550  00 


SCHEDULE  A— Continued. 


No. 

of 

Vote 

SERVICE 

Amount 

Total 

230 

LIGHTHOUSE  AND  COAST  SERVICE 

$        cts. 

166.000  00 
485.000  00 
750.000  00 

600.000  00 
60.000  00 

56.300  00 
10.000  00 

40.000  00 
1,000  00 

8.700  00 

500  00 
12.000  00 
12,000  00 

400  00 

$        cts. 

231 

Salaries  and  allowances  to  lightkeepers                           .    . . 

232 

233 

234 

Construction  of  lighthouses  and  aids  to  navigation,  in- 
cluding apparatus,  submarine  signals,  and  providing 
suitable  boats  for  carrying  on  construction  work .... 

235 

Administration  of  pilotage  and  maintenance  and  repairs  to 
steamer  Eureka .      .          

236 

237 

To  provide  for  breaking  ice  in  Thunder  Bay  and  Lake  Su- 
perior and  other  points  deemed  advisable  for  the  good 
of  navigation. ...                                               

238 

Repairs  to  Maritime  Road 

239 

Amount  required  to  pay  pension  of  $300  each  per  annum  to 
following  retired  pilots:— Ls.  R.  Demers,  Theodule  La- 
chance,  Jos.  Lapointe,  Nestor  Lachance,  Paul  Gobeil, 
Barthelemi  Lachance.  Alphonse  Asselin,  Chas.  Nor- 
mand,  Nap.  Rioux.  Elzear  Desrosiers,  Hubert  Ray- 
mond,   Arbel    Bernier,    Laurent    Godbout.    Adelme 
Pouliot.   Edmond   Larochelle,   L.    E.    Morin,   A.   T. 
Simard,  J.  Plante,  V.  Vezina,  J.  G.  Dupil,  Raymond 
Paquet,  Alfred  Larochelle,  Elzear  Godbout,  Theophile 
Corriveau.  Alphonse  Pouliot,  Emilio  Couillard,  Treffle 
Delisle,  David  Dumas,  Alfred  Goudreau 

240 
?41 

To  provide  for  telephones  at  different  points  throughout  the 

Dominion  in  connection  with  aids  to  navigation.  .  .  . 

New  vessel  to  replace  the  Maisonneuve ... 

742 

Amount  required  for  rebuilding  of  Scout 

243 

Allowance  to  Harbour  Master  at  Amherstburg,  for  super- 
vision of  lights  and  buoys  in  St.  Clair  River.  Detroit 
river,  Lake  Erie  and  other  services  during  the  season 
of  navigation 

SCIENTIFIC  INSTITUTIONS 

Department  of  the  Interior 

Astronomical  Surveys — Investigations  and  demarcations. 
etc.,  including  expenses  of  Dominion  Astronomical 
Observatory  at  Ottawa  and  Branch  at  Saanich  Hill. 
B.  C,  and  $1,000  to  J.  J.  McArthur,  as  International 
Boundary  Commissioner. . 

2  201  900  00 

244 

197,500  00 
201.793  00 

245 

Department  of  Marine  and  Fisheries 

Meteorological  Service,  including  Magnetic  Observatory, 
grants  of  $500  each  to  Kingston  and  Montreal  Ob- 
servatories; also  allowance  of  $400  to  L.  F.  Gorman, 
Observer  at  Ottawa 

MARINE  HOSPITALS 

Marine  Hospitals,  including  grants  to  institutions  assisting 
sailors 

399  293  00 

?4<) 

75,000  00 
3,000  00 

Shipwrecked  and  distressed  seamen 

STEAMBOAT  INSPECTION 
Steamboat  Inspection 

78.000  00 
79.749  00 

247 

248 
249 

FISHERIES 

Salaries  and  disbursements  of  Fishery  Officers,  including 
the  expenses  of  the  Fisheries  Advisory  Board,  and  an 
allowance  of  $300  to  W.  J.  E.  Casey,  Secretary  thereof 

Building  fishways  and  clearing  rivers 

305,000  00 

30,000  00 

4,000  00 

8.000  00 

6.000  00 

750 

Legal  and  incidental  expenses , .        .... 

751 

Canadian  Fisheries  Museum 

757 

Oyster  culture 

SCHEDULE  K— Continued. 


SERVICE 


Amount 


Total 


FISHERI ES— Co»c/«<f(rd 

To  assist  in  the  establishment,  maintenance  and  inspection 
of  cold  storage  for  bait,  the  conservation  and  develop- 
ment of  deep  sea  fisheries,  and  to  provide  for  better 
transportation  facilities  for  fresh  fish 

To  provide  for  the  reduction  of  dogfish  by  means  of  ex- 
perimental works  or  otherwise 

To  pay  Customs  Officers  for  services  in  connection  with 
issuing  modus  vivendi  licenses 

To  provide  for  the  maintenance  of  a  Fisheries  Intelligence 
Bureau 

Fisheries  Patrol  Service 

To  provide  for  a  Fisheries  exhibit  at  the  Canadian  Na- 
tional Exhibition  at  Toronto 

Salaries,  building  and  maintenance  of  fish  breeding  estab- 
lishments  

To  provide  for  the  inspection  of  pickled  fish 

Marine  Biological  Board  of  Canada 


MINES  AND  GEOLOGICAL  SURVEY 
Mines  Branch 

Investigation  of  ore  and  other  economic  deposits,  structural 
materials,  expenses  of  Fuel  and  Ore  Dressing  Plant, 
collection  of  mining  and  metallurgical  statistics .... 

Publications,  English  and  French  editions  of  reports,  pur- 
chase of  books  of  reference,  laboratory  supplies,  in- 
struments, office  contingencies 

For  expenses  in  connection  with  the  manufacture  and 
storage  of  explosives 

Dominion  of  Canada,  Assay  Office 

Maintenance  of  Assay  Office,  Vancouver,  B.  C 

Geological  Survey  Branch 

For  explorations,  surveys  and  investigations,  wages  of  ex- 
plorers, draughtsmen  and  others 

For  publication  of  English  and  French  editions  of  reports; 
maps,  illustrations,  etc 

For  maintenance  of  offices  and  museum;  instruments, 
chemicals,  books  of  reference;  miscellaneous  assistance 
and  contingencies 

For  purchase  of  specimens 

Compensation  to  J.  R.  Lyons  for  quarters  vacated 


LABOUR 

Conciliation  and  Labour  Act,  including  publication,  print- 
ing, binding  and  distribution  of  the  Labour  Gazette,  and 
allowance  to  correspondents,  and  for  clerical  assistance 
in  preparing  tables  of  statistics 

Industrial  Disputes  Investigation  Act 

Combines  Investigation  Act 

Industrial  Training  and  Technical  Education 

Fair  Wages  and  Inspection  Officers 


INDIANS 

Ontario  and  Quebec 

Relief,  medical  attendance  and  medicines. . 
Repairs  to  roads  and  bridges,  and  drainage 
General  expenses 


125,000  00 

60,000  00 

900  00 

5,000  00 
190,000  00 

10,000  00 

400,000  00 
25,000  00 
26,000  00 


71,620  00 

62,000  00 
1,000  00 

25,000  00 


150,000  00 
65,000  00 


50,000  00 

5,000  00 

400  00 


35.000  00 

25,000  00 

2,500  00 

1,000  00 

15,000  00 


430.020  00 


78,500  00 


28.000  00 
11,900  00 
51,075  00 


SCHEDULE  A— Continued. 


No. 

of 

Vote 


SERVICE 


Amount 


Total 


271 


272 


273 


2741 


275 


276. 


277 


mi>lAnS— Concluded 
Nova  Scotia 


Salaries 

Relief 

To  provide  for  encouragement  of  agriculture . 

Medical  attendance  and  medicines 

Repairs  to  roads  and  dyking 

Miscellaneous  and  unforeseen 


New  Brunswick 


Salaries 

Relief 

Medical  attendance  and  medicines 

Miscellaneous  and  unforeseen 

Repairs  to  roads 

To  provide  for  encouragement  of  agriculture . 


Prince  Edward  Island 


Salaries 

Relief  and  seed  grain 

Medical  attendance  and  medicines. 
Miscellaneous 


Manitoba,  Saskatchewan,  Alberta  and  Northwest 
Territories 


Implements,  tools,  etc 

Field  and  garden  seeds 

Live  stock 

Supplies  for  destitute 

Hospital,  medical  attendance  and  medicines. 

Triennial  clothing 

Surveys 

Sioux 

Grist  and  saw  mills 

General  expenses 


British  Columbia 


Salaries 

Relief  to  destitute  Indians 

To  assist  Indians  in  farming,  fruit  culture  and  cleansing 

orchards 

Hospital,  medical  attendance  and  medicines 

Travelling  expenses 

Office,  miscellaneous  and  unforeseen  expenses 

Surveys 


Yukon 

Relief,  medical  attendance  and  medicines. 

Surveys 

General  expenses 


Indian  Education 


Indian  Education. 


278 


General 

Advances  to  Indians  surrendering  their  lands  under  pro 
visions  of  section  89  of  the  Indian  Act,  which  will 
afterwards  be  repaid  from  the  avails  of  the  land ... 

Relief  to  destitute  Indians  in  remote  districts 

To  prevent  spread  of  tuberculosis 

Printing,  stationery,  etc 

Grant  to  assist  Indian  Trust  Fund  Account  310,  suppres 
sion  of  liquor  traffic 

Surveys,  Ontario,  Quebec  and  Maritime  Provinces 

To  provide  for  the  expenses  in  connection  with  epidemic  of 
small-pox  and  other  diseases 

To  provide  an  amount  to  pay  Indian  Agents'  fees  in  con 
nection  with  registration  of  births,  deaths  and  mar- 
riages  

General  legal  expenses 


cts. 


4 

« 

5 
9 

400  00 
000  00 
000  00 
000  00 
600  00 
162  00 

1 
8 

1 

888888 
S88SS8 

1 

600  00 
125  00 
850  00 
650  00 

11 

4 

4 

143 

105 

6 

11 

6 

1 

263 

,893  00 
.530  00 
,835  00 
,465  00 
,035  00 
,000  00 
.000  00 
,418  00 
,049  00 
,924  00 

47 
22 

,840  00 
,000  00 

8,450  00 
43.200  00 
20,000  00 
19,560  00 

5.000  00 

11.000  00 
7,000  00 
4,000  00 

734 

,115  00 

25,000  00 

60.000  00 

10.000  00 

5,000  00 

3.000  00 
3.000  00 

10.000  00 


1 . 500  00 
5.500  00 


$        cts. 


SCHEDULE  A — Continued, 


No 

of 

Vote 


SERVICE 


Amount 


Total 


ROYAL  NORTHWEST  MOUNTED  POLICE 

Northwest  Territories,  Yukon  Territory,  Provinces 
OF  Alberta  and  Saskatchewan 

Pay  of  force 

Subsistence,  billeting,  forage  and  dog  feed,  fuel  and  light, 
clothing,  repairs  and  renewals,  horses,  arms  and  am- 
munition, stationery,  medical  stores,  transport,  water 
service,  building  repairs,  and  contingencies 

To  compensate  members  of  the  Royal  North  West  Mounted 
Police  for  injuries  received  while  in  the  discharge  of 
duty 


GOVERNMENT  OF  THE  NORTHWEST 
TERRITORIES 

Salary  of  Mr.  Fred  White  as  Commissioner  of  the  North' 

west  Territories , 

Salary  of  Mr.  L.  Duplessis  as  Secretary  to  the  Commis 

sioner 

Salary  of  Mr.  Geo.  D.  Pope  as  Accountant  to  the  Commis 

sioner 

Schools 

Relief  to  destitute,  maintenance  of  insane  patients  and 

prisoners 

Investigations,    travelling    expenses,    clerical    assistance 

printing,  stationery  and  contingencies 

GOVERNMENT  OF  THE  YUKON  TERRITORY 

Salaries  and  expenses  connected  with  the  administration  of 
the  Territory 

Grant  to  Local  Council 

Grant  to  Local  Council  for  maintenance  of  and  repairs  to 
roads 


DOMINION  LANDS  AND  PARKS 


Salaries  of  the  Outside  Service 

Contingencies,  advertising,  etc 

Surveys,  examination  of  survey  returns,  printing  of  plans, 
etc 

Amount  required  to  pay  the  fee  of  the  Board  of  Examiners 
for  D.  L.  Surveyors,  of  the  Secretary  and  of  the  Sub 
examiners  and  for  stationery,  printing,  rent  of  rooms 
and  furniture,  etc.  (The  fees  of  Messrs.  E.  Deville 
Otto  J.  Klotz  and  W.  M.  Tobey,  members  of  the 
Board,  and  J.  A.  Cote,  Secretary,  are  to  be  paid  out  of 
this  sum) 

To  assist  in  publishing  the  transactions  of  the  Association  of 
Dominion  Land  Surveyors 

Protection  of  Timber  in  Manitoba,  Saskatchewan,  Alberta 
the  N.  W.  T.  and  the  Railway  Belt  in  B.  C,  tree  cul- 
ture in  Manitoba,  Saskatchewan,  Alberta,  and  in 
spection  and  management  of  Forest  reserves 

Grant  to  Canadian  Forestry  Association 

To  pay  expenses  connected  with  Water-Power  investiga- 
tions and  reports  in  Manitoba,  Saskatchewan,  Alberta 
and  the  Railway  Belt  in  B.  C 

For  surveys  and  works  under  the  Irrigation  Act,  etc.,  in 
eluding  S400  for  P.  Marchand  as  Auditor  of  disburse- 
ments made  by  Companies  acquiring  lands  under  the 
Irrigation  system 

Grant  to  Western  Canada  Irrigation  Association 

Grant  to  Cypress  Hills  Water  Users'  Association 

Canadian  National  Parks 

Engraving,  lithographing,  printing  and  preparation  of 
maps,  plans  and  kindred  publications  of  the  Dominion 
including  necessary  materials  for  same 

Costs  of  litigation  and  legal  expenses 

Ordnance  Lands  salaries  and  expenses 

Grant  to  Alpine  Club  of  Canada 


$    cts. 

651,790  25 

503,378  75 
3,000  00 


1,000  00 

300  00 

300  00 
3,000  00 

1,900  00 

1,500  00 


120,000  00 
125.000  00 


75.000  00 


465,000  00 
270,000  00 

776.300  00 


2.400  00 
125  00 


650,000  00 
2,000  00 


159,000  00 


174,000  00 
500  00 
250  00 

300,000  00 


66,100  00 

11.000  00 

1,720  00 

1,000  00 


$    cts. 


1.158,169  00 


8,000  00 


320,000  00 


2,879.395  00 


SCHEDULE  A— Continued. 


No. 

SERVICE 

Amount 

Total 

283 

MISCELLANEOUS 
Conodn  Gdzctte                                    .        

$        cts. 

21,000  00 

7.000  00 

50,000  00 

45,000  00 

100,000  00 

585  00 

5,000  00 

11,000  00 

40,000  00 
200  00 

12,000  00 

1,000  00 

1 , 200  00 

2,500  00 

2,500  00 
60,000  00 

80,000  00 

13.000  00 

500  00 

500  00 

5,000  00 
500  00 

5,000  00 
2,500  00 

500  00 
28,000  00 

1,000  00 

8,000  00 
3.000  00 

10.000  00 
2.000  00 

5.000  00 

5,500  00 

46,200  00 

400  00 

5,000  00 
4,000  00 
5.000  00 

1,000  00 
2.500  00 

50,000  00 

$        cts. 

284 

285 

Printing  Bureau — Plant — New             .          

286 

287 

Miscellaneous  printing.  .  .                             

288 

Contribution  towards  publication  of  International  Cata- 
logue of  Scientific  Literature                         

289 

290 

Expenses  under  the  Naturalization  Acts                         .... 

291 

292 
293 

Unforeseen  expenses,  expenditure  thereof  to  be  under  Order 
in  Council,  and  a  detailed  statement  to  be  laid  before 
Parliament  within  first  fifteen  days  of  next  session .... 

Grant  to  the  Interparliamentary  Union  for  Peace . 

To  provide  for  the  expenses  of  the  Acting  High  Comn)is- 

294 

For  supply  of  Canadian  publications  to  Library  of  High 

295 

To  provide  for  purchase  of  600  copies  of  the  Parliamen  ary 
Guide 

296 

Special  allowance  to  Sir  Charles  Fitzpatrick.  to  cover  ex- 
penses when  attending  the  sittings  of  the  Judicial 

297 

Special  allowance  to  the  Chief  Justice  of  the  Supreme 
Court  of  Canada,  to  cover  travelling  and  other  expenses 
in  connection  with  his  services  while  acting  as  Deputy 

298 

Public  Archives 

299 

To  provide  for  the  expenses  of  the  Conservation  Commis- 
sion                 

300 

Expenses  of  litigated  matters  conducted  within  the  De- 
partment of  Justice     .                

301 

Annual    contribution    to    the    Canadian    Law    Library, 

302 

Consolidation    and    publication    of    Reports.    Orders    in 
Council  and  correspondence  upon  Provincial  Legislation 
since  1905 

303 

Expenses  under  the  Pecuniary  Claims  Convention  with  the 
United  States 

304 
305 

Grant  to  Chief  Constables'  Association  of  Canada 

Cost  of  proceedings  before  the  International  Joint  Com- 
mission  

306 
307 

To  assist  in  suppression  of  the  White  Slave  Traffic 

Amount  required  to  pay  Consular  offices  abroad  for  ser- 
vices  

308 

Salaries  and  expenses  of  the  Paris  Agency 

309 

Allowance  to  Mr.  W.  J.  Stewart.  Chief  Hydrographer.  for 
services  performed  under  Order  in  Council  of  the  19th 
October.  1912.  in  relation  to  questions  under  considera- 
tion by  the  International  Joint  Commission,  during 
the  year  1917-18 

310 

Amount  required  to  meet  expenses  of  the  Technical  Board 
appointed  to  consider  questions  relating  to  the  level  of 
the  Lake  of  the  Woods 

311 

Grant  to  Canadian  Mining  Institute 

312 

Grant  to  assist  the  Canadian  Association  for  the  prevention 
of  Tuberculosis 

313 

Grant  to  the  Canadian  Handicrafts'  Guild 

314 

Grant  to  assist  the  Canadian  Branch  of  the  St.  John 
Ambulance  Association 

Grant  to  the  National  Battlefields  Commission: — 
(a)  For  expenses  of  administration 

31i 
316 

(6)  For  maintenance  of  the  National  Battlefields  Park. . 

(c)  For  maintenance  of  Martello  Tower  No.  4 

Grant  in  aid  of  the  Canadian  General  Council  of  the  Boy 
Scouts  Association 

317 

Grant  to  the  Royal  Society  of  Canada 

318 

Grant  to  the  Victorian  Order  of  Nurses 

319 

Contribution  to  aid  in  carrying  on  the  work  of  the  Astrono- 
mical Society 

320 

Royal  Academy  of  Arts ' . 

321 

Canadian  Press.  Limited — Towards  expenses  of  a  Na- 
tional News  Service 

SCHEDULE  A— Continued. 


SERVICE 


Amount 


Total 


MISCELLANEOUS— Co«c/Md«d 

To  provide  for  the  salary  of  a  private  secretary,  S.  Lelidvre, 
to  the  Speaker  of  the  Senate 

To  provide  for  the  salary  of  a  private  secretary,  A.  Hinds 
$600,  and  clerical  services,  to  the  Hon.  Sir  James 
Lougheed,  a  member  of  the  Cabinet  and  Leader  of  the 
Senate 

Contribution  to  McGill  University  towards  the  mainte- 
nance of  a  Regional  Bureau  for  Canada,  for  the  Inter 
national  Catalogue  of  Scientific  Literature 

Allowance  for  private  secretary  to  Sir  George  Perley 


CUSTOMS 

Salaries  and  contingent  expenses  of  the  several  ports  in  the 
Dominion,  including  pay  for  overtime  of  officers,  not- 
withstanding anything  in  the  Civil  Service  Act,  and 
temporary  Customs  buildings  and  rentals 

Salaries  and  travelling  expenses  of  Inspectors  of  ports  and 
of  other  officers  on  inspection  and  preventive  service, 
including  salaries  and  expenses  in  connection  with  the 
Board  of  Customs 

Miscellaneous — Printing  and  stationery,  subscriptions  to 
commercial  papers,  flags,  dating  stamps,  locks,  in- 
struments, etc.,  for  various  ports  of  entry,  express 
charges  on  samples,  stationery  and  forms,  legal  ex- 
penses, premiums  on  guarantee  bonds,  and  uniforms 
for  Customs  Officers 

To  provide  for  expenses  of  maintenance  of  revenue  cruisers 
and  for  preventive  service 

Amounts  to  be  paid  to  Department  of  Justice  to  be  dis- 
bursed by  and  accounted  for  to  it,  for  secret  preventive 
service 


EXCISE 

Salaries  of  officers  and  inspectors  of  Excise,  and  to  provide 
for  increase  depending  on  the  result  of  Excise  examina- 
tions  

For  extra  duty-pay  at  large  distilleries  and  other  factories . . 

Duty-pay  to  officers  serving  longer  hours,  at  other  than 
special  survey 

Preventive  service — Contingencies 

Preventive  service — Salaries 

Travelling  expenses,  rent,  fuel,  stationery,  etc 

To  provide  for  stamps,  stationery,  salaries,  travelling  ex- 
penses, etc.,  in  connection  with  War  Tax 

Stamps  for  imported  and  Canadian  tobacco 

To  pay  collectors  of  customs  for  duty  collected  by  them . . . 

Provisional  allowance  of  not  more  than  $50  each  to  officers 
in  Manitoba  and  provinces  west  thereof,  whose 
salaries  from  any  Government  service  do  not  exceed 
$2,500 

To  enable  the  Department  to  supply  methylated  spirits  to 
manufacturers,  the  cost  of  which  will  be  recouped  by 
the  manufacturers  to  whom  it  is  supplied,  and  to  pay 
rent,  power,  freight,  salaries,  etc 


WEIGHTS  AND  MEASURES,  GAS  AND  ELECTRIC 
LIGHT  INSPECTION 

Salaries  of  officers,  inspectors  and  assistant  inspectors  of 
Weights  and  Measures 

Rent,  fuel,  travelling  expenses,  postage,  stationery,  etc.,  for 
Weights  and  Measures,  including  amount  for  purchase 
of  Standards  of  the  Metric  System,  salaries  and  other 
expenses  of  inspection 

Provisional  allowance,  not  more  than  $150  each  to  officers 
in  Manitoba  and  provinces  west  thereof,  whose  salaries 
do  not  exceed  $2,500  per  annum  (Weights  and 
Measures) 


$        cts. 
600  00 

1,200  00 


2,000  00 
1,200  00 


3.590,000  00 


335.000  00 


180,000  00 
100,000  00 

10.000  00 


581,318  75 
16,000  00 

2,000  00 

15,000  00 

155,000  00 

90,000  00 

125,000  00 

130,000  00 

5.000  00 


11,000  00 


170,000  00 


155,250  00 


80,000  00 


5,000  00 


648.085  00 


4,215,000  00 


,300,318  75 


SCHEDULE  A — Continued. 


No 

of 

Vot. 

SERVICE 

Amount 

Total 

WEIGHTS  AND  MEASURES,  GAS  AND  ELECTRIC 
LIGHT  INSPECTION— Cow c/Mderf 

Salaries  of  gas  and  electricity  inspectors 

$        cts. 
88.500  00 

59,000  00 

4.000  00 

1,000  00 

800  00 

400  00 

$        cts. 

Rent,  fuel  travelling  expenses,  stationery,  etc.,  for  gas  and 
electricity  inspection,  and  the  purchase  and  repairs  of 
instruments 

328 

Provisional  allowance,  not  more  than  $150  each  to  officers 
in    Manitoba    and    provinces    west    thereof,    whose 
salaries  do   not  exceed   $2,500.     (Gas  and   electric 
Light) 

Export  of  electric  power 

The  International  Bureau  of  Weights  and  Measures 

The  International  Electro,  Technical  Commission 

ADULTERATION  OF  FOOD,  ETC. 

Adulteration  of  food  and  the  administration  of  the  Act  re- 
specting fertilizers,  fraudulent    marking    and    com- 
mercial feeding  stuffs 

393,950  00 

,1?9 

50.000  00 
2.000  00 

500  00 

Proprietary  or  Patent  Medicines 

Inland  Revenue  Department — Minor  Revenue  Expendi- 
tures  

RAILWAYS  AND  CANALS 

(Chargeable  to  Collection  of  Revenue) 

Canadian  Government  Railways 
Working  expenses 

52,500  00 

330 

25.000.000  00 

1,440.000  00 
42,500  00 

2.000  00 

2,000  00 

2.000  00 

2.000  00 
50Q  00 

1.000  00 

331 

Canals 
Staff  and  repairs 

Statistical  officers 

Miscellaneous 

Canadian  Government  Railways 

Gratuity  to  the  wife  of  Fireman  Wm.  Blair  who  was  badly 
injured  on  the  Transcontinental  Railway  and  after- 
wards went  insane 

Compassionate  allowance  to  the  widow  of  the  last  Charles 
E.  Moore,  who  was  accidentally  killed  while  in  the 
discharge  of  his  duties  as  engine  driver  on  the  Trans- 
continental Railway,  September  5,  1916 

Compassionate  allowance  to  the  widow  of  the  late  Gideon 
J.  Fairbairn.  who  was  accidentally  killed  while  in  the 
discharge  of  his  duties  as  engine-driver  on  the  Trans- 
continental Railway,  February  17,  1916 

332 

Compassionate  allowance  to  the  two  children  of  the  late 
Joseph  Howard,  who  was  employed  as  watchman  on 
the  Transcontinental  Railway,  and  was  killed  while 
going  to  his  post  of  duty  at  Ena.  Ontario.  Dec.  22, 1915 

Compassionate  allowance  to  the  mother  of  the  late  Fred. 
Downey,  who  was  accidentally  drowned  at  Halifax 
while  assisting  in  putting  out  fire  on  Pier  No.  2 

Compassionate  allowance  to  the  widow  of  the  late  John  F. 
Rogers,  clerk  in  the  employ  of  the  Canadian  Govern- 
ment Railways,  who  was  shot  and  killed  by  an  insane 
soldier  in  the  office  building  of  the  Canadian  Govern- 
ment Railways,  October  17,  1916 

SCHEDULE  A— Continued. 


No. 

of 

Vote 

SERVICE 

Amount 

Total 

RAILWAYS  AND  CANALS— Conc/«rffd 

$           Ct9. 

$        cts. 

(Chargeable  to  Collection  of  Revenue)— Concluded 

M  iscELLANEOus — Concluded 

Hudson  Bay  Railroad 

333 

Compassionate  allowance  to  the  father  of  the  late  S.  Harba- 
tink,  who  was  accidentally  killed  while  in  the  perform- 
ance of  his  duties  as  labourer  on  the  Port  Nelson 
Terminals  of  the  Hudson  Bay  Railway 

600  00 
1.000  00 

Allowance  to  Thomas  Maloney  who  was  severely  burned 
while  in  discharge  of  his  duties  as  cook  at  Port  Nelson 
— Hudson  Bay  Railway 

Trent  Canal 

334 

Compassionate  allowance  to  the  widow  of  the  late  John 
Bakes,  who  was  accidentally  drowned  on  August  26, 
1916 

2.000  00 

26.495,600  00 

PUBLIC  WORKS 

{Chargeable  to  Collection  of  Revenue) 

Slides  and  Booms,  Graving  Docks,  Locks  and 
Dams,  etc.,  VVorking  Expenses,  etc. 

Slides  and  booms 

54,400  00 

45,300  00 

53,200  00 

4,000  00 

3^S 

Graving  docks 

Collection  of  Public  Works  revenues 

Telegraph  and  Telephone  Lines 

Prince  Edward  Island  and  mainland 

7,000  00 

198,000  00 
55,000  00 
75.000  00 
57,000  00 
93,000  00 

255,000  00 
10,000  00 

Land  and  cable  telegraph  lines,  Lower  St.  Lawrence  and 
Maritime  Provinces,  including  working  expenses  of 
vessels  required  for  cable  service 

^^6 

Saskatchewan 

Alberta 

British  Columbia — Vancouver  Island  District 

Yukon  System  (Ashcroft  Dawson) 

Telegraph  and  telephone  service  generally 

906,900  00 

POST  OFFICE 

Outside  Service 

Salaries  and  allowances 

8,447,264  25 

8.349.737  50 

843.838  00 

195,000  00 

^^^ 

Miscellaneous 

Yukon  Territory 

17.835.839  75 

TRADE  AND  COMMERCE 

338 

Canada's  proportion  of  expenditure  in  connection  with 
International  Customs  Tariffs  Bureau 

662  00 

160,000  00 

339 

Trade  Commissioners  and  Commercial  Agents,  including 
expenses  in  connection  with  negotiations  of  treaties  or 
in  extension  of  commercial  relations;  miscellaneous 
advertising  and  printing,  or  other  expenditure  con- 
nected with  the  extension  of  Canadian  trade 

SCHEDULE  A— Concluded, 


No. 

of 

Vote 

SERVICE 

Amount 

Total 

340 

TRADE  AND  COMMERCE— Conc/«d<<i 

Bounties  on  lead  and  crude  petroleum.     To  cover  ex- 
penditure in  connection  with  the  administration  of  the 
Acts 

$        cts. 

5,000  00 

850,000  00 

3,000  00 

8,500  00 

810,000  00 

100.000  00 

13,500  00 

10,000  00 

4,000  00 

38,933  33 

6,000  00 

150,000  00 

$         Cts. 

341 

Salaries,  rents,  wages  and  contingencies  under  the  Canada 
Grain  Act 

342 

Salaries  and  contingencies  under  the  Inspection  and  Sale 
Act 

343 
344 

Salaries  and  contingencies  under  the  Cullers  Act,  including 

an  amount  of  $1,800  for  superannuated  Cullers 

To  provide  for  the  construction,  acquisition,  leasing  or  ex- 

345 

Census  and  Statistics 

346 

Canada  Year  Book 

347 

Dominion  Royal  Commission 

348 

Gold  and  Silver  Marking  Act 

349 

West  India  Cable    .                

350 

351 

To  provide  for  the  development  and  extension  of  Canadian 
Trade 

Total . .                            .    .                        

2.159.595  33 

128,781,764  70 

SCHEDULE  B. 

(Based  on  the  Supplementary  Estimates,  1916-1917.) 

Sums  granted  to  His  Majesty  by  this  Act  for  the  financial 
year  ending  31st  March,  1917,  and  the  purposes  for 
which  they  are  granted. 


No. 

of 

Vote 

SERVICE 

Amount 

Total 

352 

CIVIL  GOVERNMENT 

Department  of  Finance  and  Treasury  Board — 

To  provide  for  increased  salary  of  J.  C.  Saunders,  As- 
sistant Deputy  Minister,  from  January  1,  1917.  .  .  . 
Allowance  for  Private  Secretaries— Further  amount  re- 

$        cts. 

300  00 
300  00 

1.500  00 
2,500  00 

1,400  00 
250  00 

300  00 

900  00 

3,000  00 
3,000  00 

$        cts. 

353 

Department  of  Customs — 
Contingencies — 

Clerical  and  other  assistance — Further  amount  re- 

Sundries — Further  amount  required 

354 

Department  of  Inland  Revenue — 

To  provide  for  the  promotion  of  four  assistant  analysts 
from  Second  Division  Subdivision   B,  to  Second 
Division  Subdivision  A           .        .            .... 

355 

Department  of  Railways  and  Canals — 

To  provide  for  increase  in  salary  of  Assistant  to  the 
Minister  to  $4,500,  from  January  1,  1917 

356 

Post  Office  Department — 

To  increase  the  salary  of   Robert   Fowler,   Assistant 
Deputy    Postmaster    General,    to    $3,500,    from 
October  1,  1916             

To  provide  for  one  clerkship  in  First  Division,  Sub- 
division B  from  November  1,  1916 

357 

Department  of  External  Affairs — 
Contingencies — 

Printing  and  stationery — Further  amount  required . . 
Sundries — Further  amount  required 

ADMINISTRATION  OF  JUSTICE 

General 

Allowance  to  Judges  holding  Courts  in  Rainy  River  Dis- 
trict in  1915-16 — Further  amount  required. 

13.450  00 

358 

302  00 

800  00 

1,000  00 

359 

Supreme  Court  of  Canada 

Contingencies    and    disbursements,    salaries    of    officers 
(Sheriffs,  etc.),  books,  magazines,  etc.,  for  Judges,  not 

360 

Exchequer  Court  of  Canada 

Contingencies — Judges'  travelling  expenses,  remuneration 
to  Sheriffs,  etc.,  printing,  stationery,  etc.,  and  $150  for 
Judges'  books— "Further  amount  required 

2.102  00 

SCHEDULE  B— Continued. 


No. 

of 

Vote 

SERVICE 

Amount 

Total 

LEGISLATION 

$         cts. 

$        etc. 

House  of  Commons 

^6V 

Contingencies — 

To  provide  an  amount  for  the  Speaker  of  the  House  of 
Commons  in  lieu  of  residence  and  attendants,  from 
January  18.  1917,  to  March  31,  1917,  at  the  rate  of 

1,095  00 

1,500  00 
5  000  00 

To  provide  for  making  a  General  Index  to  tlie  Journals 
and  Sessional  Papers  of  the  House  of  Commons  for 
the  period  1904  to  1915.  inclusive 

[ 

Stationery — Further  amount  required 

General 

362 

Printing,  binding  and  distributing  the  annual  Statutes- 
Further  amount  required 

6,000  00 

Library  ok  Parliament 

^6\ 

To  provide  for  the  salary  of  Napoleon  Aubry,  housekeeper, 
from  January  12,  1916,  to  March  31.  1917,  at  $900  per 
annum 

1 , 100  00 
366  67 

Allowance  to  housekeeper  in  lieu  of  quarters,  from  January 
12,  1916,  to  March  31,  1917,  at  $300  per  annum 

15.061  67 

ARTS  AND  AGRICULTURE 

364 

For  purchase  of  seed  grain— Governor  General's  warrants 

1,200,000  00 

MILITIA  AND  DEFENSE 

365 

Pay  of  Staff: — 

To  provide  for  salaries  of  Staff  of  new  Military  District 
No.  12 

13,265  00 
10,458  31 

366 

Gratuities: — 

To  officers  and  civilian  employees  on  retirement 

23,723  31 

RAILWAYS  AND  CANALS 

(Chargeable  to  Capital) 

Railways 

Intercolonial  Railway 

367 

Halifax — Docks  and  wharves— Further  amount  required . . 
Halifax — New   terminals  facilities — Further  amount  re- 
quired   

18,000  00 
500,000  00 
162.220  00 

To  increase  accommodation  and  facilities  along  the  line^ 
Further  amount  required 

680,220  00 

RAILWAYS  AND  CANALS 

{Chargeable  to  Income) 

Canals 

368 

Lachine  Canal 
Repairs  to  break 

175.000  00 

Miscellaneous 

369 

Contribution  to  the  International  Association  of  the  Rail- 
ways Congress 

97  3i 

175,097  33 

SCHEDULE  B—Contifiucd. 


No. 

of 

Vote 

SERVICE 

Amount 

Total 

PUBLIC  WORKS 

(Chargeable  to  Income) 

Harbours  and  Rivers 

Ontario 

370 

993  00 

MAIL  AND  STEAMSHIP  SUBVENTIONS 

371 

Steam  services  between  Prince  Edward  Island  and  Cape 
Breton  and  Newfoundland — Further  amount  required 

SCIENTIFIC  INSTITUTIONS 

3,500  00 

372 

Astronomical  Surveys — To  pay  Mr.  J.  J.  McArthur  as  In- 
ternational Boundary  Commissioner  from  the  1st  of 
November.  1916,  to  31st  of  March,  1917,  at  $1,000  per 
annum — Revote 

416  66 

INDIANS 

British  CoLtrMBiA 

373 

Office,  miscellaneous  and    unforeseen   expenses — Further 

8,000  00 

ROYAL  NORTHWEST  MOUNTED  POLICE 

374 

Subsistence,  forage,  fuel  and   light,   clothing,    buildings, 
repairs  and  renewals,  dogs,  arms,  and  ammunition, 
medical  stores,    billeting,   transport,   water  service, 
stationery  and   contingencies— Further  amount  re- 
quired   

100,000  00 

DOMINION  LANDS  AND  PARKS 

375 

To  pay  the  fees  of  Mr.  W.  M.  Tobey.  member  of  the  Board 
of  Examiners  for  Dominion  Land  Surveyors — Revote 

MISCELLANEOUS 

202  50 

376 

Distribution     of     Parliamentary     Documents — Further 

5,000  00 
50,000  00 

1 . 500  00 
5,000  00 

4,750  00 

1.500  00 
24.333  33 

100,000  00 
5.000  00 

377 
378. 

Miscellaneous  printing — F'urther  amount  required 

To  provide  for  the  purchase  of  300  copies  of  Mr.  N.  O. 
CotS's  "Political  appointments.  Parliaments,  and  the 
Judicial  Bench  in  the  Dominion  of  Canada,  1867  to 
1914"— Ordered  in  1914     

379 
380 

To  provide  for  expenses  in  connection  with  the  Board  of 
Inquiry  into  the  cost  of  living  (1914-15)  including  pay- 
ments to  John  McDougall,  $1,250;  R.  H.  Coats,$l. 000; 
J.  U.  Vincent,  $1,000;  Legal  Representatives  of  the 
late  C.  C.  James,  $1,000,  and  Thomas  J.  Lynton. 
secretary  $500 

381 

To   complete   the   Champlain   Monument   at   Ottawa — 

382 
383 

Contribution  towards  Kitchener  Memorial  Fund 

For  the  relief  of  sufferers  by  forest  fires  in  Northern  On- 
tario—  Governor  General's  warrant     

384 

To  cover  expenditure  in  connection  with  the  reception  of 
His  Excellency  the  Duke  of  Devonshire  as  Governor 

197,083  33 

SCHEDULE  B— Continued, 


No. 

of 

Vott 


SERVICE 


Amount 


Total 


385^ 


386 


387 


388 


389 


390 


EXCISE 

Preventive  service — Contingencies — Further  amount  re 
quired 

Travelling  expenses,  rent,  fuel,  stationery,  etc. — Further 
amount  required 

To  enable  the  Department  to  supply  methylated  spirits  to 
manufacturers,  the  cost  of  which  will  be  recouped  by 
the  manufacturers  to  whom  it  is  supplied,  and  to  pay 
rent,  power,  freight,  salaries,  etc. — Further  amount 
required 


WEIGHTS  AND  MEASURES,  GAS  AND  ELECTRIC 
LIGHT  INSPECTION 

Rent,  fuel,  travelling  expenses,  postage,  stationery,  etc.,  for 
Weights  and  Measures,  including  amount  for  purchase 
of  standards  of  the  Metric  System,  salaries  and  other 
expenses  of  inspectors — Further  amount  required . . 

Provisional  allowance,  not  more  than  $150  each  to  officers 
in  Manitoba  and  provinces  west  thereof,  whose  sala- 
ries do  not  exceed  $2,500  per  annum — (Weights  and 
Measures) — Further  amount  required 


ADULTERATION  OF  FOOD,  Etc. 

Adulteration  of  food,  and  the  administration  of  the  Act 
respecting  fertilizers,  fraudulent  marking  and  commer- 
cial feeding  stuffs — Further  amount  required 

To  provide  for  payment  to  L.  Laframboise,  $58.78,  and  H 
Grignon,  $233.15,  for  special  translation 


RAILWAYS  AND  CANALS 

(Chargeable  to  Collection  of  Revenue) 

Railways 

Intercolonial    Railway  —  Working    expenses  —  Further 
amount  required 

Prince    Edward    Island    Railway — Working    expenses- 
Further  amount  required 

International   Railway  —  Working  expenses  —  Further 
amount  required 

PUBLIC  WORKS 

(Chargeable  to  Collection  of  Revenue) 

Telegraph  and  Telephone  Lines 


Saskatchewan — Further  amount  required 

British  Columbia — Mainland — Further  amount  required . 


POST  OFFICE  DEPARTMENT 

Outside  Service 

To  pay  certain  railway  mail  clerks  for  extra  work  in  check- 
ing incoming  and  outgoing  British  mails  during  the 
winter  of  1913-1914  at  the  Ports  of  Halifax  ($71.00) 
and  St.  John  ($33.04) ;  during  the  winter  of  1915-16  at 
St.  John  ($91.82);  and  during  the  summer  season  of 
1916  at  Quebec  ($459.10),  notwithstanding  anything 
to  the  contrary  in  the  Civil  Service  Act 

To  compensate  Railway  Mail  Clerk  Wyndham  Humphrey 
of  the  New  Brunswick  District,  for  loss  of  mileage  for 
the  period  between  the  10th  and  23rd  October,  1916. . 

Allowance  to  Emile  Carrier  for  injuries  which  resulted  in 
the  loss  of  an  eye,  sustained  while  acting  as  engineer  on 
the  Lady  Evelyn  during  the  season  of  1916 


3,000  00 
30.000  00 


35,000  00 


68.000  00 


20,000  00 


500  00 


5,000  00 
291  93 


20.500  00 


5,291  93 


6.000,000  00 
250,000  00 
125,000  00 


6,375.000  00 


5,000  00 
4.000  00 


9,000  00 


654  96 

20  "74 

6000  0 


1.275  00 


SCHEDULE  B— Concluded, 


No. 

of 

Vote 

SERVICE 

Amount 

Total 

391 

TRADE  AND  COMMERCE 
Salaries,  rent,  wages  and  contingencies  under  the  Canada 

%        cts. 

$        cts. 
160,000  00 

392 

UNPROVIDED  ITEMS  1915-16 

To   cover   unprovided    items    1915-16,    as    per   Auditor 
General's  Reoort  Part  B.  Daee  3.  1915-16 

68,859  99 

Total.                                           

9,127,777  42 

^ 


APPENDIX  4 
BUDGET  SPEECH 

DELIVERED   BY 

HON.  SIR  THOMAS  WHITE,  M.P. 
Minister  of  Finance 

IN  THE 

HOUSE  OF  COMMONS 
Tuesday,  April  24,  1917 

Honourable  Sir  Thomas  White  (Minister  of  Finance) 
moved : — 

That  the  Speaker  do  now  leave  the  Chair  for  the  House  to  go 
into  Committee  of  Ways  and  Means. 

He  said:  Mr.  Speaker,  I  avail  myself  of  the  oppor- 
tunity afforded  by  this  motion  to  make  the  annual  budget 
statement. 

The  features  of  the  public  finances  in  which  I  conceive 
the  House  to  be  chiefly  interested  at  the  present  time  are 
the  relationship  between  national  income  and  national 
expenditure  and  the  increase  in  the  national  debt.  For 
the  first  year  of  the  war  the  revenue  from  all  sources  was 
about  $130,000,000.  It  rose  during  the  second  year  to 
$170,000,000.  For  the  year  ended  March  31  last,  I  am 
happy  to  say,  our  income  will  reach  $232,000,000,  or  one 
hundred  million  in  advance  of  the  fiscal  year  191 5.  In 
round  figures,  $134,000,000  of  the  aggregate  was  de- 
rived from  customs,  $24,000,000  from  excise,  and  $12,- 
500,000  from  the  business  profits  war  tax.  From  this 
last  named  tax,  which  was  introduced  by  the  Budget  of 
last  year,  we  estimated  that  we  should  receive  $25,- 
000,000  during  the  three  years  of  its  currency.  Our  ex- 
perience has  proved  that  this  estimate  will  be  largely  ex- 
ceeded. This  tax  was  retroactive,  being  levied  in  respect 
of  business  accounting  periods  ending  subsequently  to 

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APPENDICES 

December  31,  19 14.  The  profits  of  the  first  accounting 
period  of  businesses  subject  to  the  tax  were  much 
affected  by  the  severe  depression  and  dislocation  of  busi- 
ness incidental  to  the  first  months  of  the  war.  Never- 
theless, from  this  first  period  the  sum  of  $12,500,000  has 
already  been  collected,  and  when  the  full  levy  is  made 
we  expect  to  have  collected  in  respect  of  this  period  as 
much  as  $15,000,000.  For  the  second  accounting- 
period,  the  taxes  for  which  are  payable  during  this  year, 
we  estimate  that  the  amount  collected  will  be  much 
larger — in  fact,  as  high  as  v$20,ooo,oooo,  or  more.  The 
increase  will,  of  course,  be  due  to  the  business  pros- 
perity which  has  prevailed  in  Canada  during  the  past 
year  and  the  profits  made  in  supplying  munitions  of  war. 
On  the  whole,  notwithstanding  the  difKiculty  of  organiz- 
ing on  short  notice  the  official  machinery  necessary  to 
cover  so  large  a  country  as  Canada,  the  tax  has  worked 
out  much  more  satisfactorily  than  we  expected,  and  the 
total  results  will  be  much  greater  than  the  estimate. 

I  have  said  that  the  total  income  of  the  past  fiscal  year 
was  $232,000,000.  Leaving  aside  for  the  moment  our 
direct  war  expenditure,  our  outlay  for  the  past  year  was 
upon  ordinary  account  $145,000,000  and  $27,000,000 
upon  capital  and  subsidy  account,  or  a  total  of  $172,000,- 
000.  It  is  to  be  borne  in  mind  that  of  our  ordinary  ex- 
penditure $25,000,000  represents  increased  interest  and 
pension  charges  due  to  the  war.  Taking  our  total 
revenue  at  $232,000,000  and  our  total  current  and  capital 
expenditure  at  $172,000,000,  we  find  that  during  the 
past  fiscal  year  we  were  able  to  pay  from  our  income  all 
current  and  capital  expenditure,  all  charges  of  interest 
upon  our  increased  national  debt,  all  pension  outlays, 
and  in  addition  devote  the  sum  of  $60,000,000  to  pay- 
ment of  the  principal  of  our  war  expenditure.  For  a 
country  such  as  Canada,  of  sparse  population  and  with- 
out the  conditions  of  long-established  and  concentrated 
wealth  prevailing  in  older  and  more  settled  communities, 
the  result  must  be  regarded  as  extremely  satisfactory. 

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THE  CANADIAN  BUDGETARY  SYSTEM 

Coming  next  to  the  question  of  our  direct  war  expen- 
diture, we  find  that  with  our  increasing  military  effort 
it  also  is  continually  increasing.  Since  the  beginning  of 
hostilities  our  total'  war  outlay,  including  estimated  and 
unadjusted  liability  to  Great  Britain  for  the  maintenance 
of  our  troops  at  the  front  and  inclusive  of  withheld  pay, 
totals,  so  far  as  we  can  calculate,  about  $600,000,000. 
As  the  result  of  this  large  war  expenditure,  the  net 
national  debt  of  Canada,  which  was  $336,000,000  before 
the  outbreak  of  war,  has  arisen  to  over  $900,000,000, 
although  this  will  not  be  shown  by  our  official  statements 
for  some  months  to  come.  By  the  end  of  the  present 
fiscal  year  it  may  reach  $1,200,000,000. 

From  the  beginning  it  has  been  clear  that  it  would  not 
be  possible  for  the  people  of  Canada  to  pay,  during  the 
war,  more  than  a  part  of  the  principal  of  our  war  ex- 
penditure. The  policy  of  the  Government  has  therefore 
been  directed  along  two  main  lines :  first,  to  fund  the  w^ar 
indebtedness  so  as  to  postpone  its  maturities  to  periods 
well  beyond  the  end  of  the  war,  and  secondly,  by  in- 
creased taxation  on  the  one  hand  and  the  reduction  of 
current  expenditure  on  works  on  the  other  to  be  in  a 
position  to  meet  from  annual  income  all  annual  outlays 
including  increased  interest  and  pension  charges  and  in 
addition  a  substantial  amount  of  the  war  expenditure 
itself. 

In  order  to  carry  out  this  programme  it  will  be  neces- 
sary, as  our  war  expenditure,  and  consequently  our 
interest  and  pension  charges  increase,  to  increase  also 
our  income.  This  raises  the  question  of  the  sources  of 
revenue  still  open  to  us.  A  higher  customs  taxation 
upon  luxuries  has  been  frequently  suggested,  but  this 
proposal  overlooks  the  fact  that  most  articles  of  this 
character  are  embraced  under  fixed  rates  in  the  treaty 
with  France,  and  the  tariff  cannot  therefore  be  raised  in 
respect  of  these.  Apart  from  this  we  should  hesitate  at 
a  time  when  France  needs  the  advantage  of  all  her  sales 
on  this  side  of  the  Atlantic  to  assist  her  exchanges,  to 

362 


APPENDICES 

place  a  prohibition  or  increased  duty  against  importa- 
tions from  our  great  Ally. 

Then  it  has  been  frequently  suggested  that  following 
the  example  of  Great  Britain  and  the  United  States,  we 
should  adopt  an  income  tax  upon  all  incomes  beyond, 
say,  $i,ooo  or  $2,000.  The  comparison  in  this  regard, 
however,  of  Canada  with  either  of  these  countries  is 
fallacious.  We  are  not  a  country  of  large  accumulated 
wealth  and  of  incomes  derived  from  investments.  Can- 
adian incomes  are  derived  mostly  from  personal  earn- 
ings, and  while  there  are  many  exceptions,  the  rule  pre- 
vails generally  throughout  the  Dominion.  So  far  as  I 
am  aware  the  incomes  of  the  professional  and  salaried 
classes  throughout  Canada  have  not  materially  increased 
since  the  outbreak  of  the  war.  In  the  case  of  many  they 
have  actually  declined.  This  being  so,  it  does  not  seem 
equitable  to  impose  upon  these  the  burden  of  an  ad- 
ditional income  tax — for  they  are  taxed  now  upon  their 
incomes  by  municipalities  and  provinces — at  a  time  when 
owing  to  the  war  the  cost  of  living  has  so  greatly  in- 
creased. If  such  a  tax  is  to  be  imposed,  it  seems  to  me 
that  so  far  as  the  great  majority  of  Canadians  are  con- 
cerned, it  might  better  be  levied  in  time  of  peace,  when 
the  cost  of  living  is  again  normal.  It  is  further  to  be 
pointed  out  that  the  maximum  amount  which  would  be 
obtained  from  such  a  tax  in  Canada  would  in  terms  of 
Dominion  finance  be  comparatively  small  and  that  its 
administration  would  require  almost  a  second  Civil 
Service  sufficient  in  number  to  cover  every  municipality, 
rural  and  urban,  throughout  the  Dominion.  The  cost 
of  levy  and  collection  of  such  a  tax  would  be  much  higher 
proportionately  than  in  a  geographically  small,  wealthy, 
densely  populated  country  like  Great  Britain  or  than  in 
the  United  States,  which  although  of  the  same  area  as 
Canada  has  twelve  times  the  population  and  much  more 
than  twelve  times  our  wealth.  On  the  whole  it  would 
appear  to  me  that  the  income  tax  should  not  be  resorted 
to  by  the  Dominion  Government  until  its  necessity  be- 

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THE  CANADIAN  BUDGETARY  SYSTEM 

comes  clearly  and  unmistakably  apparent  notwithstand- 
ing the  drawbacks  which  I  have  mentioned.  In  con- 
nection with  this  tax  it  is  also  to  be  observed  that  the 
larger  incomes  in  so  far  as  they  are  not  personally  earned 
are  derived  in  part  from  holdings  in  joint  stock  com- 
panies already  subject  to  taxation  under  the  provisions 
of  the  Business  Profits  War  Tax  Act.  It  must  also  be 
remembered  that  the  Canadian  public  are  voluntarily 
supporting  the  Canadian  Patriotic,  Red  Cross,  and  other 
funds.  The  amount  contributed  annually  to  these  funds 
is  much  in  excess  of  the  amount  likely  to  be  realized 
from  any  income  tax.  It  is  true  that  some  wealthy  men 
do  not  contribute  their  fair  share  to  these  funds.  But 
this  would  also  be  true  in  any  scheme  of  income  taxation 
especially  with  issues  of  Dominion  bonds  exempt  from 
Dominion  taxation. 

The  question  of  further  revenue  then  narrows  down 
to  abnormal  profits  made  by  business  firms  during  the 
period  of  the  war  and  this  in  my  view  is  the  proper  and 
legitimate  source  to  which  to  look  for  increased  revenue 
to  meet  the  increased  cost  of  the  war.  If  a  business  is 
making,  in  war  time,  profits  above  the  normal,  they  must 
be  due  to  the  abnormal  conditions  created  by  the  war, 
that  is  to  say,  such  a  business  is  deriving  advantage  from 
the  war.  It  follows  that  it  may  properly  be  required  to 
contribute  a  share  of  such  profits  to  the  Government  for 
the  purposes  of  the  war.  I  do  not  see,  Mr.  Speaker,  that 
it  makes  much  difference  whether  the  business  in  ques- 
tion is  the  making  of  munitions  or  of  any  other  class. 
Munitions  are  needed  and  no  discredit  attaches  to  the 
enterprise  which  provides  them.  The  steel  company 
which  engages  in  the  production  of  munitions  could  in 
most  cases  make  as  much  if  not  more  money  by  selling 
its  steel  products  in  world  markets.  Moreover,  it  would 
be  inequitable  to  discriminate  against  the  firm  which 
makes  a  profit  upon  the  finished  article  known  as  muni- 
tions and  leave  untaxed  the  profits  (it  may  be  equally 
large)  of  those  firms  which  manufacture  and  supply  the 

364 


APPENDICES 

raw  material  or  partly  manufactured  products  from 
which  they  are  made,  or  the  businesses  throughout  the 
country  which  make  abnormal  profits  from  the  distribu- 
tion of  money  expended  by  Governments  in  payment  for 
such  munitions.  If  higher  profits  are  made  in  the  manu- 
facture of  munitions  the  higher  the  tax  taken  under 
business  profits  legislation. 

In  accordance  with  the  principle  which  I  have 
enunciated  the  Government  last  year  imposed  the  Busi- 
ness Profits  War  Tax.  Under  that  legislation  profits 
in  excess  of  a  certain  percentage  upon  capital  invested 
were  taxed  to  the  extent  of  twenty-five  per  cent  of  such 
excess.  This  measure  has  proved  quite  successful,  not 
the  least  of  its  merits  being  the  small  cost  of  its  admin- 
istration which  will  probably  not  exceed  one-half  of  one 
per  cent  upon  the  amount  collected.  In  view  of  the  in- 
creasing interest  and  pension  charges  due  to  the  war 
and  believing  this  to  be  the  true  source  to  which  recourse 
should  now  be  had  for  further  revenue,  we  propose  to 
extend  this  tax  by  taking  an  increased  share  of  profits. 

We  propose  to  take  from  persons,  firms  and  companies 
liable  to  the  Business  Profits  War  Tax  Act,  191 6,  fifty 
per  cent  of  all  profits  in  excess  of  fifteen  per  cent  but  not 
exceeding  twenty  per  cent  per  annum  and  seventy-five 
per  cent  of  all  profits  in  excess  of  twenty  per  cent  per 
annum  upon  capital.  That  is  to  say,  up  to  fifteen  per 
cent  they  will  be  liable  to  the  existing  legislation  and  in 
addition  we  shall  take  one-half  of  their  profits  betw^een 
fifteen  per  cent  and  twenty  per  cent  and  three-fourths 
of  their  profits  beyond  twenty  per  cent.  The  increased 
tax  will  chiefly  affect  manufacturers  of  munitions  and 
other  war  supplies.  While  the  percentage  of  excess 
profits  which  is  taken  is  large,  sufficient  is  left  to  pro- 
vide incentive  to  effort  on  the  part  of  all  subject  to  the 
tax. 

The  new  legislation  will  apply  to  the  last  accounting 
period  of  the  three  year  term  provided  for  in  the  Busi- 
ness Profits  War  Tax  Act,  1916,  namely,  to  all  account- 

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THE  CANADIAN  BUDGETARY  SYSTEM 

ing  periods  ending  after  December  31,  191 6.  I  am  un- 
able to  estimate  what  amount  will  be  derived  from  this 
taxation  as  it  will  depend  upon  the  condition  of  business 
during  the  year.  It  will,  however,  give  us  without 
doubt  a  very  substantial  additional  revenue. 

Before  leaving  the  question  of  taxation,  I  desire  to  say 
that  the  measures  we  have  adopted  have  necessarily 
broadened  in  their  scope  as  the  war  has  progressed.  No 
one  has  at  any  time  been  able  to  forecast  the  length  of  the 
war.  It  has  now  lasted  nearly  three  years  and  the  end 
is  not  yet  in  sight.  Should  another  year  be  added  to  its 
duration  with  the  consequent  increase  in  our  financial 
burden  new  sources  of  revenue  must  undoubtedly  be 
sought.  In  seeking  for  these  it  should,  I  am  sure, 
always  be  kept  in  mind  that  Canada  has  been  in  the  past 
and  will  likely  be  for  many  years  in  the  future  a  country 
inviting  immigration  and  capital  to  develop  its  resources 
and  contribute  to  its  prosperity.  Especially  should  we 
in  considering  taxation  measures  for  the  period  follow- 
ing the  war  keep  in  view  the  desirability  of  the  flow  of 
settlers  and  capital  to  Canada  not  being  retarded 
through  fear  on  their  part  of  heavy  Federal  taxation. 

Canada's  war  loans 

The  question  of  our  financing  since  the  last  Budget 
was  fully  explained  and  discussed  in  the  first  part  of  this 
session.  During  the  recess  we  successfully  floated  the 
third  Canadian  War  Loan,  an  issue  of  $150,000,000  five 
per  cent,  twenty  year  bonds  at  96.  The  public  response 
was  most  gratifying,  the  issue  having  been  oversub- 
scribed to  the  extent  of  about  one  hundred  million  dollars. 
The  proceeds  of  this  loan  will  enable  us  to  finance  our- 
selves and  the  Imperial  treasury  in  respect  of  expendi- 
tures in  Canada  until  June.  It  is  my  present  intention  to 
arrange  then  for  an  issue  of  notes  or  treasury  bills  and  if 
conditions  are  favourable  ofifer  another  war  loan  in  the 
early  fall. 

366 


APPENDICES 

Since  the  outbreak  of  war  we  have  floated  in  Canada 
domestic  loans  aggregating  $350,000,000  and  have  in 
addition  furnished  $150,000,000  through  our  chartered 
banks  to  the  Imperial  treasury  to  meet  its  commitments 
for  munitions  and  supplies  purchased  in  Canada. 
Everywhere,  I  believe,  this  is  regarded  as  a  very  notable 
achievement  on  the  part  of  Canada.  It  has  not  only 
made  possible  our  participation  on  a  large  scale  in  the 
war,  but  it  has  in  greater  measure  than  we  realized 
brought  about  the  present  state  of  prosperity  in  the 
Dominion.  Without  the  aid  afforded  by  the  savings  of 
our  people  the  expenditures  which  have  been  made  in 
Canada  by  both  Governments  for  supplies  and  munitions 
could  not  have  been  made,  so  that  those  who  have  saved 
have  benefited  not  only  themselves  but  the  entire  com- 
munity. While  our  national  saving  during  the  war  has 
been  gratifyingly  large,  it  is  not  so  great  as  it  should 
have  been,  and  today  not  better  advice ^can  be  offered  to 
the  public  than  to  exercise  the  strictest  thrift  and  econ- 
omy. Every  additional  day  the  war  lasts  makes  this  in- 
dividual and  national  duty  the  more  imperative. 

Canada's  trade  1916-17 

No  aspect  of  our  affairs  during  the  war  is  more 
striking  than  the  vast  increase  which  has  taken  place  in 
our  international  trade.  The  aggregate  of  our  imports 
and  exports  (excluding  coin  and  bullion)  for  the  fiscal 
year  1912  was  $841,000,000;  for  1913,  $1,063,000,000; 
for  19 14,  $1,090,000,000;  for  191 5,  $958,000,000;  for 
1916,  $1,309,000,000.  For  the  year  ended  on  March  31 
last,  the  total  international  trade  of  Canada  reached  the 
enormous  total  of  $2,043,000,000. 

Mr.  Michael  Clark:  Would  the  minister  kindly  give 
us  a  statement  of  the  exports  and  imports  ? 

Sir  Thomas  White.  If  my  hon.  friend  does  not  mind, 
I  would  prefer  to  give  them  in  committee.  I  have  them 
here,  but  I  cannot  conveniently  lay  my  hand  upon  them. 

Z^7 


THE  CANADIAN  BUDGETARY  SYSTEM 

This,  Mr.  Speaker,  is  nearly  double  the  volume  of  the 
largest  trade  in  the  history  of  Canada  before  the  war. 
Equally  notable  with  this  huge  increase  in  volume  is  the 
change  which  has  taken  place  in  relative  amounts  of 
imports  and  exports.  For  191 2,  the  balance  against  us 
was  $125,000,000;  for  1913,  $309,000,000;  for  1914, 
$180,000,000;  for  191 5,  $36,000,000.  For  1916,  we  had 
for  the  first  time  in  many  years  a  favourable  balance  of 
$249,000,000.  During  the  last  fiscal  year  this  favour- 
able balance  increased  to  $314,000,000.  Figures  such 
as  these  indicate  a  very  prosperous  condition  within  the 
Dominion.  It  must,  however,  be  steadily  kept  in  mind 
that  the  higher  prices  obtainable  under  war  conditions 
for  our  national  products  and  the  output  of  our  indus- 
trial plants  of  war  supplies  and  munitions  are  chiefly  re- 
sponsible for  this  extraordinarily  favourable  condition 
of  external  trade,  and  that  with  the  cessation  of  the  war 
dislocation  of  industry  and  modification  of  prices  are 
bound  to  ensue.  I  take  it  that  it  is  unnecessary  for  me 
to  mention  the  large  increase  in  our  exports  due  to  our 
grain  and  other  commodities  sent  abroad  by  us  and  the 
high  prices  which  have  been  and  are  being  obtained  for 
them.  I  said  that,  with  the  cessation  of  the  war,  dis- 
location of  industry  and  modification  of  prices  are  bound 
to  ensue.  The  only  safeguard  against  these  conditions 
is  saving  on  the  part  of  all  who  are  now  engaged  at  good 
wages  and  are  in  a  position  to  save  and  the  careful  hus- 
banding of  their  resources  by  firms  and  companies  en- 
gaged in  business.  The  position  of  most  businesses  in 
Canada  is  now  thoroughly  sound,  and  it  is  for  their 
proprietors,  with  the  prudent  watchfulness  of  their 
bankers,  to  keep  them  in  that  condition.  The  sources 
of  danger  to  business  in  war  time  are  speculation  in  com- 
modities and  stock  exploitation  on  the  exchanges.  With 
these  avoided  and  national  savings  greatly  increased  we 
might  look  forward  with  confidence  to  whatever  may 
occur  in  the  reconstruction  period  after  the'  war. 

368 


APPENDICES 

We  have  no  tariff  changes  to  propose. 

To  carry  out  the  taxation  proposal  which  I  have  an- 
nounced and  certain  necessary  amendments  to  the  Busi- 
ness Profits  War  Tax  Act,  191 6,  I  beg  to  give  notice  of 
the  following  resolution  which  I  shall  move  in  com- 
mittee : — 

Resolved,  That  it  is  expedient  to  amend  the  Business 
Profits  War  Tax  Act,  1916,  by  providing: — 

1.  That  in  any  business  taxable  under  the  Act  w^here 
the  annual  profits  exceed  fifteen  per  centum  per  annum 
the  tax  shall  be  increased  to  fifty  per  centum,  with  respect 
to  all  profits  in  excess  of  the  said  fifteen  per  centum  but 
not  exceeding  twenty  per  centum  per  annum,  and  where 
the  profits  exceed  twenty  per  centum  per  annum  the  tax 
shall  be  increased  to  seventy-five  per  centum  with  re- 
spect to  all  profits  in  excess  of  the  said  twenty  per  cen- 
tum, and  such  increases  in  the  tax  shall  be  levied  against 
and  paid  by  the  person  owning  such  business  for  each  and 
every  accounting  period  ending  after  the  thirty-first  day 
of  December,  one  thousand  nine  hundred  and  sixteen ; 

2.  That  for  the  purposes  of  the  said  x\ct,  the  actual 
unimpaired  reserve,  rest  or  accumulated  profits  held  at 
the  commencement  of  an  accounting  period  by  an  in- 
corporated company  shall  be  included  as  part  of  its 
capital  as  long  as  it  is  held  and  used  by  the  company  as 
capital ; 

That  any  enactment  founded  on  this  resolution  shall 
be  deemed  to  have  come  into  force  on  and  from  the 
eighteenth  day  of  May,  one  thousand  nine  hundred  and 
sixteen ; 

3.  That  the  tax  shall  be  paid  each  year  within  one 
month  from  the  date  of  the  mailing  of  the  notice  of  as- 
sessment ; 

4.  That  with  respect  to  every  business  liable  to  tax- 
ation hereunder  the  period  for  which  the  returns  shall 
be  made  and  during  which  it  shall  be  liable  for  assess- 
ment shall  be  at  least  thirty-six  months,  commencing 

369 


THE  CANADIAN  BUDGETARY  SYSTEM 

with  the  beginning  of  the  first  accounting  period  end- 
ing after  the  thirty-first  day  of  December,  1914,  or  for 
such  less  period  as  the  business  may  have  been  carried 
on  from  the  beginning  of  the  said  accounting  period  to 
the  end  of  the  period  for  which  the  said  tax  may  be  levied 
under  the  said  Act. 


370 


INDEX 

PAGE 

Addresses  to  the  Crown  123 

Address  from  the  Throne  83 

Ames,  Herbert  B., 

Capital  and  revenue  accounts,  58 

Armstrong,  Joseph  E., 

Erection  post  offices  without  knowledge  of  department,  221 

Appointments  on  government  railways,  268 

Effect  of  civil  service  reform,  269 

Atwater,  Hon.  Mr., 

Supplementing  exhausted  appropriations  by  Governor  Gen- 
eral's warrants,  69 

Audit  Act, 

Consolidated  revenue  and  288-328 

Auditor  General,  148-9,  159-64 

Relations  to  Treasury  Board,  151-2 

Independent  status,  152-3 

Duties  explained,  163-4 

Auditor  General's  Report, 

Required  before  estimates  discussed,  105 

Contents  of,  182-196 

Barker,  Samuel, 

Public  Accounts  Committee  procedure,  169 

Auditor  General  and  capital  expenditure,  258-9 

Bennett,  William  H., 

Apportionment  of  public  works,  211 

Public  wharf  receipts,  214 

Public  buildings  entailing  increased  fixed  charges  226 

Bergeron,  Joseph  H., 

Tenders  for  contracts,  208 

Wharfage  expenditures,  214 

Blain,  Richard, 

Exceeding  appropriations,  224 

Blake,  Hon.  Edward, 

Creation  of  superior  court  judges,  280-1 

Borden,  Sir  Robert  Laird, 

Criticism  of  estimates  by  opposition,  132-3 

Summoning  witnesses  before  House  of  Commons  committees  167 

Abuses  caused  by  spoils  system,  205-6 

Wharf  expenditures,  216 

Wharf  receipts,  217 

Plans  for  public  buildings,  222-3 

Brock,  William  Rees, 

Public  works  expenditures  in  opposition  districts,  212 

British  North  American  Act, 

Features  of,  8-15 

Budget  Speech,  119-21 

Shortcomings  of,  196-8 

For  1917,  360-370 

Budgetary  System, 

Essential  features  of,  1-7 

371 


THE  CANADIAN  BUDGETARY  SYSTEM 


PAGE 

Cabinet, 

Growing  power  of,  276-9 

Cahan,  Mr., 

Non-observance  estimates,  226 

Cartwright,  Sir  Richard  J., 

Change  in  fiscal  year  period,  48 

Charging  expenditures  to  fiscal  year,  55 

Governor  General's  warrants,  63,  66,  70,  250 

Unauthorized  expenditures,  72 

Budget,  when  to  be  presented,  121 

Public  Accounts  Committee,  164 

Ministers  participating  in   the  meetings   of,  173 

To  pass  on  action  of  Treasury  Board  overruling  Auditor- 
General,  266-7 

Capital  and  Revenue  Accounts,  57-61 

Expenditures  chargeable  to,  58 

Leads  to  manipulation  of  public  accounts,  60 

Objections  to,  255-60 

Auditor  General  to  investigate,  259-60 

Carvell,  Frank  B., 

Patronage  in  militia  appointments,  203 

Charlton,  John, 

Doctoring  of  public  accounts,  61 

Chartered  Banks  of  Canada,  145-8 

Civil  Service  Reform, 

Status  of,  199 

Clancy,  James, 

Opposition  moving  to  reduce  estimates,  106 

Over-expenditure  on  public  buildings,  224 

Clarke,  Edward  F., 

Public  buildings  expenditure,  '  223 

Cochrane,  Edward, 

Public  buildings  estimates  passed  before  plans  made,  222 

Small  initial  appropriations  and  high  ultimate  costs,  223 

Consolidated  Revenue  and  Audit  Act,  150-60 

Coordination, 

Lack  of  between  departments,  245-8 

Crockett,  Oswald  G., 

Erection  public  buildings  without  consulting  local  departments,        221 

Davidson,  A.  L., 

Public  works  used  to  influence  election,  211 

Davies,  Hon.  L.  H., 

Over-expenditure  by  Governor  General's  warrants,  68 

Public  Accounts  Committee  and  action  of  Treasury  Board 

overruling  Auditor  General,  267 

Government  railways  employees  in  politics,  204 

Department  of  Finance, 

Functions  of,  141-5 

Devlin,  Emmanual  B., 

Partisan  removals,  201 

DuFFERiN,  Earl  of, 

Canadian  civil  service,  206 

DuNKiN,  Hon.  Christopher, 

Writing  oflf  of  unexpended  balances,  52 

Durham,  Lord, 

Mission  to  Canada  and  report  to  Queen,  .  28-9 


372 


INDEX 


Edwards,  John  W., 

Minister  present  when  department  estimates  passed,  107 

Inadequate  postal  facilities,  227 

Emerson,  Hon,  Henry  R., 

Dismissal  government  railway  employees,  200 

Both  parties  blamable  for  spoils  system,  201-2 

Growing  power  of  cabinet,  276-7 

Estimates, 

Preparation  of,  75-7 

Treasury  control  absent,  11 

For  public  works,  79-81 

Cabinet,  control  of,  81-2 

To  parliament,  82 

Submission,  main  and  supplementary,  83-5 

Form  of,  89-96 

Governor  General  must  recommend,  99 

Consideration   by   Parliament,  111-2 

Inadequate  consideration  of,  112-6 

Supplementary,  260-1 

Estimates  Committee,  115-6 

Expenditures, 

Receipts  determining,  274-5 

Family  Compact,  24 

Fenety,  G., 

Haphazard  expenditures   before   responsible  government,  29 
Lack  of  system  in  preparing  estimates  and  effect  on  pro- 
vincial finances,  30-1 

Fielding,  Hon.  William  S., 

Increased  dominion  subsidies  explained,  42 

1907  readjustment  of,  43-4 

Closing  of  fiscal  year  and  of  accounts  of,  53-4 

Governor  General's  warrants,  65-6 

Expenditures  in  excess  of  appropriations,  IZ 

Estimates  at  instance  of  members  of  Parliament,  79-80 

Salary  to  leader  of  opposition,  130 

Payment  of  claims  by  direct  audit  and  by  letter  of  credit,  155-6 

Wharf  expenditures,  215 

Fiscal  Year,  Dominion,  46-7 

Fischer,  Sydney  Arthur, 

Change  in  fiscal  year,  49 

Fixed  and  Controllable  Expenditures,  73-4 

Flynn,  Edmond  Power, 

Necessity  of  an  opposition,  127 

Foster,  Sir  George  Eulas, 

Subsidies  tend  to  extravagrance,  38 

Criticism  of  1907  increase  in,  43 

Shifting  items  between  capital  and  revenue  account,  60 

Employment  of  Governor  General's  warrants,  65 

Estimates  at  request  of  members  of  Parliament,  80 

Cabinet  revision  of  estimates,  81 

Lump  sum  estimates,                                                               '  94 

Effect  absence  of  minister,  107 

Adequate  consideration  expenditures  difficult,  112 

Witnesses  before  Public  Accounts  Committee,  170 


373 


THE  CANADIAN  BUDGETARY  SYSTEM 


PAGE 

Change  in  Auditor  General's  report,  188-9 
Public  funds  used  to  further  party  interest,  201 
Patronage  system,  202 
Evils  caused  by  patronage  system,  206-7 
Public  wharf  expenditure,  214-5,  217 
Demarcation  of  provincial  and  dominion  public  improve- 
ments, 214-30 
Haphazard  public  buildings  expenditure,  218 
How  determined,  219-20 
Erection  without  knowledge  of  department  interested,  221-2 
Curtailment  postal  facilities,  227 
Appropriations  rendered  farcical,  225-6 
Lack  of  departmental  coordination,  246 
Drawbacks  of  lump  sum  estimates,  262-3 
Impartial  board  to  pass  on  public  improvements,  270 
Objection  to  provincial  subsidies,  281 

Fowler,  George  W., 

Original  estimates  exceeded,  223 

Eraser,  Duncan  C, 

Witnesses  before  Public  Accounts  Committee,  169 

French  Canada, 

History  of,  20-35 
Status  under  treaty  of  1763,  20 
Changes  caused  by  Quebec  Act,  1774,  21 
Division  into  lower  and  upper  Canada  in  1791,  21-2 
Executive  controlling  revenues,  22-3 
Ask  legislature  for  annual  grant  in  1817,  23 
Executive-legislative  conflict  over  appropriations,  24-27 
Rebellion  of  1837,  27 
Lord  Durham's  mission  and  report,  28-9 
Reunion  of  upper  and  lower  Canada  in  1841,  and  introduc- 
tion of  responsible  government,  32-3 
Legislature  obtains  control  of  appropriations  in  1849,  ,  33-4 
Finances  of  united  Canada,  34-5 
Ascendency  of  French  Canadians,  35 

German,  William  Manlay, 

Subversion  of  responsible  government,                                  ,  276 

Government  Contracts, 

Partisan  awarding  of,  207-10 

Governor  General, 

Must  recommend  estimates,  99 
Address   to   Parliament   and  transmission   of   estimates   to 

House  of  Commons,  83 

Approving  changes  in  taxation,  118 

Governor  in  Council.  136-8 

Governor  General's  Warrants, 

Statutory  provisions  regarding,  63 

Improper  use  of,  65-70 

Resultant  evils  of,  67-8 

Lessened  abuse  of,  70-1 

Abolition  of  desirable,  248-53 

Grey,  Earl, 

Instructions  to  colonial  governors  on  failure  of  supply  bills,        251-2 

Guthrie,  Hugh, 

Dominion  spoils  system,  199-200 


374 


INDEX 


PAGE 

Patronage  lists,  208 

Competition  for  government  contracts,  210 

Haggart,  Hon.  John  Graham, 

Prerequisites  to  submission  of  estimates,  11 

Opposition  criticism  of,  134 

Hazen,  Hon.  J.  Douglas, 

Speech  from  the  throne,  83 

Government  supporters  favorite,  201 

Local  patronage  committee,  202 

Civil  service  participating  in  politics.  204 

Tenders  for  government  contracts,  ^)9 

Henderson,  David, 

Public  buildings  in  sparsely  populated  districts,  228 

Controlling  costs  of  same,  225 

HoLTON,  Hon.  Luther  H., 

Change  in  dominion  fiscal  year,  46 

House  of  Commons, 

Membership  and  election  of,  18 

Money  bills  in,  97 

Hughes,  Sir  Sam, 

Government  supporters  favored,  201 

Departmental  expenditures  without  orders  in  council,  247 

Hull,  Hon.  John  S., 

Capital  and  revenue  accounts,  61 

Ingram,  Andrew  B., 

Proceedings  public  accounts  committee,  17Q 

Jessel,  Captain, 

English  public  accounts  committee,  264-5 

Kyte,  George  W., 

Method  of  awarding  government  contracts,  209 

Public  works  in  opposition  districts  neglected,  215 

Land£rkin,  George, 

Erection  of  public  buildings  for  political  ends,  228 

Landry,  Hon,  Dr., 

Capital  expenditures  omitted   from   Canadian  budgets,  69 

Laurier,  Rt.  Hon.  Sir  Wilfred, 

Salary  to  leader  of  opposition,  130 

Treasury  Board  overrulings,  162-3 

Replacement  of  by  court,  163 

Appointments  on  party  lines,  200 

Bribing  electorate  with  public  works,  212 

Uncontemplated  expenditures  in  estimates,  254 

Leader  of  the  Opposition. 

Position  and  salary,  128-31 

Lennox,  Haughton, 

Cabinet  responsible  for  changes  in  public  employees,  78 

Treasury  Board  biased,  162 

Extent  of  patronage  evils,  203 

Trivial  public  improvements,  216-7 

Lesperance,  David  Ovide, 

Partisan  dismissals  from  office,  200 

Letter  of  Credit, 

Payments  by,  155-7 

Lewis,  Edmond  Norman, 

Disproportionate  consideration  estimates,  114 


375 


THE  CANADIAN  BUDGETARY  SYSTEM 

PAGE 

Means  of  accelerating  their  consideration,  115 

Lister,  James  F., 

Public  works  and  bribes  to  electorates,  212 

Lump  Sum  Appropriations,  261-4 

McCarthy,  Dalton, 

Issuance  of  Governor  General's  warrants,  64 

McMuLLEN,  James, 

Governor  General's  warrants,  67-8 

McNeil,  Alexander, 

Governor  General's  warrants,  70 

MacDonald,  Alexander  M., 

Unexpendable  items  and  estimates,  56 

Political  activity  of  civil  servants,  204 

Abolition  of  patronage  evils,  207 

MacDonald,  Sir  John  A., 

Size  of  Public  Accounts  Committee,  166 

MacLean,  a.  K., 

Importance  of  revising  estimates,  175 

Low  state  of  public  conscience,  231-2 

Lack  of  ministerial  coordination,  246 

Unexpended  items  in  estimates,  254 

Unnecessary  government  expenditures,  272 

Revenue  determining  expenditures,  273-4 

Main  Estimates,  83 

Marcil,  Hon.  Charles, 

Civil  servants  participating  in  politics,  205 

Martin,  Medric, 

Patronage  committees  awarding  contracts,  203 

Middleboro,  William  S., 

Meetings  of  Public  Accounts  Committee,  172 

Mills,  Hon.  David, 

Petitions  for  public  work,  79 

Functions  of  opposition,  128 

Resolution  concerning  public  buildings,  228 

Monk,  Frederick  D., 

Public  building  policy,  219-20 

Mulock,  Hon.  William, 

Wasteful  government  expenditures,  213 

Construction  of  public  warves,  215 

Murray,  Sir  George, 

Suggestions  for  framing  estimates,  242-5 

Governor  General's  warrants,  252-3 

Northrup,  William  B., 

Procedure  in  Public  Accounts  Committee,  169-72 

Opposition,  motions  to  reduce  estimates,  106 

Criticising  estimates,  132-4 

Necessity  and  role  of,  126-34 

Salary  to  leader  of,  128-32 

Ineffectiveness  of,  271 

Osler,  Edmund  B., 

Wharves  on  inner  waters,  215 

Pardee, 

Favoritism  toward  government  districts,  211 

Parliament, 

As  fund  raising  authority,  135 


376 


INDEX 


page 

Patronage  Lists, 

201 

In  provinces, 

229 

Peters,  Hon.  Frederick, 

Features  of  budget  speech, 

120 

Private  bill  legislation. 

124-6 

Private  Accounts, 

Description  of. 

176-82 

Public  Accounts  Committee, 

164-75 

Composition  of. 

164-5 

Powers, 

165-7 

Summoning  witnesses  before, 

167 

Proceedings  and  meetings  of. 

168-73 

Its  value, 

173-5 

Faults  of, 

264-5 

Proposed  investigation  of  Treasury  Board  overruling, 

266-7 

Public  buildings,  expenditures  upon. 

218 

Erection  how  secured. 

219-20 

Department  aflfected  not  consulted. 

220-2 

Incomplete  plans  for. 

222 

Resultant  higher  cost, 

223 

Increased  fixed  charges  from. 

226 

Policy  regarding. 

227-9 

Public  Funds, 

Issuance  from  treasury. 

150-5 

Disbursement  of. 

155-8 

As  trust  fund, 

270 

Public  Works  Expenditures, 

Government  districts  favored  with, 

210-11 

Unproductive  expenditures, 

213 

On  public  wharves,  etc., 

213-4 

On  petty  improvements, 

214-7 

PuGSLEY,  Hon.  William, 

New  public  works  in  supplementary  estimates, 

84 

Applications  for  public  buildings, 

220 

British  naval  expenditure. 

278 

Quebec  Act  of  1774, 

21 

Reid,  J.  D., 

Meetings  Public  Accounts  Committee, 

172-3 

Dismissals  for  offensive  partisanship. 

204 

Responsible  Government, 

Adoption  of  in  Canada, 

32-3 

Partial  success  only, 

233-5 

Revenue  Account, 

See  capital  and  revenue  account. 

Revenue  Laws, 

118 

Passage  of. 

121-3 

Revotes, 

Lapsing  of  unexpended  balances  and  revotes  of  same, 

55-7 

Roche,  William  J., 

Public  votes  and  opposition  districts, 

211 

Rogers,  Hon.  Robert, 

Retention  of  unexpendable  items  in  estimate, 

255 

Senate, 

Appointment  of, 

18 

Attitude  toward  supply  bill, 

97-102,  123 

377 


THE  CANADIAN  BUDGETARY  SYSTEM 


PAGE 

Sheyn,  Hon.  Joseph, 

Capital  account  as  set-off  to  public  debt,  59 

Sinclair,  John  H., 

Revotes  of  same  appropriation,  56 

New  appropriations  and  supplementary  estimates,  85 

Party  patronage  list,  201 

New  administration  cancelling  government  contracts,  209 

SOMMERVILLE,    J  AMES, 

Postoffices  and  politics,  213 

Spoils  System,  199-207 

In  provinces,  230-1 

Prevents  economy  and  efficiency,  268-9 

Sproule,  Thomas  S., 

Revotes  of  unexpended  appropriations,  57 

Powers  of  Public  Accounts  Committee,  167 

Examination  of  witnesses  by,  170-1 

Favoritism  in  awarding  government  contracts,  209 
Governor    General's    warrants    in    hands    of    unscrupulous 

ministry,  251 

Voting  items  not  to  be  expended.  254 

Stockton,  Alfred  A., 

Salary  to  leader  of  opposition.  129 

Subsidies, 

Origin  of  dominion,  35-8 

Debt  assumption  clause,  36 

Legislative  and  per  capita  subsidies,  37-^ 

To  newer  provinces,  39 

1907  revision  of,  40-2 

Objections  to,  279-82 

Suppementary   EvSti mates,  83-5,  260 

Supply, 

Bills  of,  110-11 

In  Senate,  123 

Supply,  Committee  of. 

Formation  of,  102 

Consideration  of  estimates  in.  104-9 

Sutherland,  Hon.  James, 

New  public  works  in  supplementary  estimates,  84 

Sydenham,  Lord, 

On  finances  of  upper  and  lower  Canada,  32 

Tanner,  Hon.  Mr., 

Ephemeral  capital  expenditure,  59 

Tarte,  Hon.  J.  Israel, 

Main  and  supplementary  estimates,  84 

Public  works  for  government  ridings,  210 

Tax  Laws, 

Governor  General  approving  changes  in,  118 

Permanency  of,  272-3 

Tisdale,  Hon.  David, 

Misleading  initial  appropriation,  223 

Treasury  Board,  138-41 
Overruling  of  Auditor  General,                                              151-2,  160-4 

Trust  Funds, 

Public  funds  as,                                                             *    .  270 


378 


INDEX 

PAGE 

TuppER,  Sir  Charles  Hibbert, 

Governor  general's  warrants,  64,  250 

Moving  cause  of  confederation,  71 

United  Canada, 

Formation  of,  28-33 

Upper  Canada, 

Formation  of,  21-22 

History,  22-27 

Reunited  to  lower  Canada,  ^^ 

Votes  on  Account,  116-8 

Votes  of  Credit,  124 

Ways  and  Means  Committee, 

Formation  of,  102 

Consideration  of  supply  measures  bj',  109 

Changes  in  tax  laws,  119 

Wharves, 

Wasteful  expenditures  on,  213-4 

White,  Sir  Thomas, 

1917  budget  speech.  Appendix  4,  360-370 

Wilcox,  Mr., 

Ephemeral  public  works,  60 

Provincial  patronage  list,  229 


379 


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